Published On: Wed, Jul 16th, 2014

Bloomberg, Globes, Take Glass Half Full, Half Empty Views of Perrigo Sale

Pharmaceutical company Perrigo has yet to be sold and already major business publications are speculating on what its sale will mean to the TASE.

Perrigo generic drugs

In contrast with a report made by Israel’s Globes business newspaper, claiming that the sale of Israel’s pharmaceutical company Perrigo could spell disaster for the Tel Aviv Stock Exchange, Bloomberg is reporting that the announcement of such a deal has sent the Israeli exchange to a three week high.

As of now, Perrigo has only retained the services of an investment bank to look into the possibility of a merger or a buyout by another pharmaceutical company. According to Globes, it hopes to get a price of up to 25% more than its market cap.

Tuesday afternoon, the benchmark TA-25 Index (TA-25) was up to 1, 399.23, on its way to its highest level since June 24. Perrigo’s shares went up 7.8% to $157. The stock traded at 2.5-times the three-month average daily volume, and is looking for its largest increase since August 2011. Its TASE market cap is $19.41 billion.

Steven Shein, a trader at Tel Aviv’s Psagot Investment House told Bloomberg, “The market is rising based on global strength as well as Perrigo, which is closing a parity gap on rumors of an acquisition. This, together with talks of a ceasefire, is pushing the market up.”

That ceasefire, unfortunately, did not take place. But the recent fighting between Israel and Hamas has not deterred investment in Startup Nation’s new companies.

Perrigo is traded both on the TASE and the New York Stock Exchange where it rose 8.7% to $158.9 giving it a market cap of $21.3 billion.

Globes, however, took a more pessimistic approach, looking towards the possibility that the sale of Perrigo could lead to the company being delisted from the TASE. Perrigo contributes 10.3% of the trading volume on the Tel Aviv 25 Index of Israel’s largest companies, second only to Teva Pharmaceutical Industries Ltd. And so, as Globes put it, “this would be a painful blow for the Israeli stock market.”

Perrigo was founded in 1887 by Luther Perrigo. Today, it leads the generic over-the-counter drug market in the US. It markets its products under the private labels of the stores that sell the firm’s drugs.

The company also has a baby food venture, as well as a division in the veterinary field. It is known as a habitual acquirer of companies. Its largest acquisition was the Israeli firm Elan, at the end of last year, for $8.6 billion in cash and shares.

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