Mylan Fan Ready to Bail Out
The largest shareholder of
Mylan Laboratories
(MYL) - Get Report
wants to sell all of his shares now that the drugmaker has dropped its plan to buy
King Pharmaceuticals
(KG)
.
Richard C. Perry, a New York investment adviser and investment fund manager, said in a
Securities and Exchange Commission
filing Friday that he plans to sell all 26,626,300 shares on the open market.
"To the extent practicable, shares will be sold daily until the entire position is sold," according to the SEC filing from Perry, who runs Perry Corp.
If Perry sells all of the shares at Mylan's current price, he will probably lose money on the deal.
When he announced on Nov. 29 that he had acquired 9.89% of Mylan's shares, Perry's SEC filing reported that he paid $491.22 million for Mylan's shares, which were acquired in multiple trades between Sept. 20 and Nov. 19. While he was buying shares, he was also selling some between Sept. 20 and Nov. 22.
If Perry sold everything at the latest Mylan share price -- $17.75 -- he would receive $472.62 million, excluding transaction fees. But because Perry has engaged in complex hedging activities related to the Mylan shares, it's hard to assess whether his Mylan investment will be a winner or loser.
Perry said he bought the Mylan shares because he wanted Mylan to complete its deal with King. That placed him against New York financier Carl C. Icahn, a bitter opponent of the King-Mylan deal, who began buying Mylan shares in late July after the two companies announced their engagement. Icahn owns 26.29 million shares, or 9.78%, of Mylan.
The deal
was canceled when the companies couldn't agree on a revised takeover price formula. Mylan had offered 0.9 shares of Mylan stock for each share of King's stock.
Icahn has disclosed that he was shorting King's shares while buying Mylan's shares. When he revealed his Mylan stake, Perry also owned 7 million, or 2.9%, of King's shares. As of Dec. 31, Perry owned 5.9 million shares, or 2.5%, of King.
Icahn also has sued Perry, alleging that Perry's purchase of Mylan's shares violates the principle of "one person, one vote" for shareholders. Icahn alleges that Perry's hedging strategy with two investment banking firms, in effect, allowed Perry to vote his Mylan shares without having an economic interest in the company.
Perry's latest SEC filing says he will halt this hedging strategy, known as security-based swap agreements, "with respect to the
Mylan shares as the shares are sold until all such shares are sold." The SEC filing also says he reserves the right to change his mind.