Supplement | HBS Case Collection | May 2014

Mylan Lab's Proposed Merger with King Pharmaceuticals—courseware

by Lucy White

Abstract

Perry Capital owns shares in King and, to facilitate approval of the merger, buys shares in Mylan, whilst hedging out its economic exposure to Mylan's share price using derivatives. The price at which Mylan proposes to merge with King is generous to King shareholders, but the merger does not look likely to be approved by Mylan shareholders, who must vote upon it. If Perry can swing the voting in favor of the deal, it will gain handsomely on its King shares without facing any corresponding losses on its Mylan holdings since those are hedged. Carl Icahn, another shareholder in Mylan, opposed the deal and sued Perry for alleged vote buying.

Keywords: Mergers and Acquisitions; Voting; Ethics; Stock Shares; Investment; Lawsuits and Litigation; Ownership Stake;

Citation:

White, Lucy. "Mylan Lab's Proposed Merger with King Pharmaceuticals—courseware." Harvard Business School Spreadsheet Supplement 214-709, May 2014.