Perrigo Company (PRGO) Bottoms Out on Failed Buyout Bid

Perrigo Company plc Ordinary Shares (PRGO) shareholders rejected a hostile buyout attempt from Mylan NV (MYL)

by Alex Eppstein

Published on Nov 13, 2015 at 12:07 PM
Updated on Nov 13, 2015 at 4:22 PM

Perrigo Company plc Ordinary Shares (NYSE:PRGO) is getting drilled, after a hostile buyout bid from Mylan NV (NASDAQ:MYL) failed to win sufficient shareholder support. At last check, PRGO has plummeted almost 7% to trade at $145.75, and is fresh off a new annual low of $140.40 -- earning it a place on the short-sale restricted list.

As might be expected, put volume has surged. By the numbers, 30,000 contracts are on the tape -- or 25 times what's expected at this point in the session. Most notably, a 10,000-contract block of January 2016 180-strike puts was bought to open by one trader, who simultaneously purchased 1 million PRGO shares as part of a risk-reversal strategy.

Put buying has been the longer-term tactic of choice. According to data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has amassed a 50-day put/call volume ratio of 0.85 -- higher than 79% of all other comparable readings from the prior year. 

Analysts have been similarly skeptical toward PRGO. Nearly two-thirds of covering brokerage firms have doled out tepid "hold" assessments.

Based on the stock's technical performance, these doubters are being proven right today. Year-to-date, Perrigo Company plc Ordinary Shares (NYSE:PRGO) is now sitting on a nearly 13% deficit, and is on pace for its lowest finish since last October.

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