Perrigo headquarters in Allegan.
ALLEGAN, Mich. (WZZM) - A West Michigan drug company is going global by acquiring an Irish biotech company.
Perrigo announced the acquisition of Elan Corporation of Ireland for $8.6 billion Monday morning. Perrigo is a maker of generic over-the-counter and prescription medications and other consumer products.
The merger will create a new holding company for the two companies which will be incorporated in Ireland.
Perrigo leaders say that no jobs will be lost in West Michigan and current growth in hiring efforts will continue.
"Committed to the area - no changes - continuued growtj" said John Hendrickson, Perrigo's Executive Vice President.
Perrigo is in the midst of it's biggest expansion over, building new plants in Holland and Allegan, creating 650 jobs.
Perrigo expects to realize savings of $150 million dollars in the first year of it's new entity.
We'll have more information on what this means for Perrigo, Allegan and Michigan on later editions of WZZM 13 News.
To read the full financial report from Perrigo, click here.
USA TODAY's Story:
After 4 months of resisting takeover bids from Royal Pharma, Irish drugmaker Elan Corp. as agreed to a buyout deal from U.S. drugmaker Perrigo.
Perrigo, the largest maker of generic drugs for major U.S. retailers, said it would pay Elan's investors $6.25 per share in cash and $10.25 in Perrigo stock, an 11% premium over Elan's closing price Friday.
Drugmakers have pursued a buyout of Elan in order to secure a flow of royalties from drugs it helped develop, including the multiple sclerosis combatant Tysabri.
In early trading, Perrigo stock was down 2.8% to $130.42 a share.
Perrigo will take advantage of the deal by moving its tax residence to Ireland, avoiding the U.S.'s 35% tax on corporate profits and cutting tax liabilities in half as it continues to develop non-U.S. sales. Ireland has a 12.5% corporate tax rate, one of the lowest in Europe.
A transitional company called New Perrigo will be registered in Ireland, according to a joint press release issued by Perrigo and Elan. Shares of New Perrigo are expected to trade on the New York Stock Exchange and the Tel Aviv Stock Exchange.
In the release Elan CEO G. Kelly Martin said the deal underscores the value of Elan's platform.
"The new combined company should deliver value, growth and diversification to shareholders for many years to come," Martin said.
Joe Papa, CEO and Chairman of Perrigo, said the acquisition and move to Ireland should create tax savings of more than $150 million.
Tysabri, a joint venture with the Massachusetts-based drugmaker Biogen Idec, faced disaster after its launch in 2005 when it was linked to development of a rare, often fatal brain-inflammation disease. But Elan and Biogen Idec persuaded U.S. and European regulators to put Tysabri back on the market in 2006 and the drug, prescribed under restricted rules reflecting its risks, has steadily grown to become a world-leading treatment for MS patients.
Elan sold much of its ownership share of Tysabri to Biogen Idec in February for $3.25 billion in cash and a minority share in future royalties. That deal opened up a behind-the-scenes scramble among several U.S.-based companies to acquire Elan for its healthy cash flow and Irish tax base.
The agreement with Biogen Idec means New Perrigo would collect up to 25% of future royalties from Tysabri, which had global sales of $1.6 billion last year.
Perrigo's takeover of Elan is expected to be finished by the end of 2013 after it receives approval from U.S. and Irish regulators.