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CNBC Exclusive: CNBC Transcript: Perrigo Chairman & CEO Joe Papa Speaks with CNBC’s David Faber on “Squawk on the Street” Today

WHEN: Today, Thursday, September 17th

WHERE: CNBC's "Squawk on the Street"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Perrigo Chairman & CEO Joe Papa on CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET) today. Following is a link to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000421676.

All references must be sourced to CNBC.

DAVID FABER: OVER-THE-COUNTER DRUG MAKER PERRIGO ANNOUNCING THIS MORNING THAT ITS BOARD HAS OFFICIALLY REJECTED MYLAN'S BUYOUT OFFER SAYING THAT OFFER UNDERVALUES PERRIGO AND THE COMPANY WILL BE A STRONGER ONE WITH ITS OWN STANDALONE STRATEGY. HERE TO GIVE US ALL THE DETAILS IS JOE PAPA, CHAIRMAN AND CEO OF PERRIGO. THANK YOU FOR COMING IN. SOME WILL SAY WELL, YOU CAN SAY ALL YOU WANT, BUT IT'S UP TO YOUR SHAREHOLDERS AND IF 50.1% OF THEM SAY HEY, YOU KNOW WHAT, I'M JUST HAPPY TO TAKE MYLAN'S CASH AND STOCK OFFER, IT DOESN'T MEAN A THING WHAT YOU SAY. YOU CAN'T PUT A POISON PILL IN. IT IS IRISH LAW. WHY DO YOU STILL THINK YOU HAVE A CHANCE OF WINNING?

JOE PAPA: DAVID, WE HAVE VERY SMART, VERY RATIONAL SHAREHOLDERS. THEY ARE GOING TO LOOK AT THIS DEAL AND THEY SEE THE TERMS, IT HAS A PREMIUM OF 13%. A VERY, VERY WEAK PREMIUM AND IN FACT, INSULTED. NUMBER TWO, IT IS A DEAL THAT AS WE LOOK AT IT, IT IS GOING TO DILUTE OUR GROWTH RATE. IT IS GOING TO DILUTE OUR MULTIPLE. FOR ALL OF THE FINANCIAL METRICS THEY DO NOT WORK. IT'S PLAINLY SAID, VERY SIMPLY SAID, WE THINK THIS IS A BAD DEAL FOR OUR SHAREHOLDERS AND WE BELIEVE OUR SHAREHOLDERS ARE GOING TO BE VERY SMART, VERY RATIONAL AND GOING TO REJECT THIS DEAL.

FABER: MYLAN WOULD SAY YOU KNOW WHAT, WE'RE PAYING 19 OR 20 TIMES EBITDA, THAT IS A VERY HIGH MULTIPLE IN YOUR INDUSTRY FOR A COMPANY THAT HAS A 6% ORGANIC GROWTH RATE. WHY WOULDN'T YOU WANT TO TAKE THAT MULTIPLE?

PAPA: SO I WOULD DIFFER WITH THAT COMMENT, OF COURSE. FIRST I WOULD SAY THAT WE HAVE EARNED THIS MULTIPLE. WE HAVE A COMPOUND ANNUAL GROWTH RATE OVER THE LAST 7 TO 9 YEARS OF APPROXIMATELY 15% ON THE REVENUE SIDE AND NEARLY TWICE THAT ON THE BOTTOM LINE. SO I THINK THAT THE GROWTH RATE WE HAVE SHOWN BOTH FROM ORGANIC AND INORGANIC IS A VERY IMPORTANT PART OF WHAT IS DIFFERENTIATED TO PERRIGO COMPANY.

FABER: WELL, ACQUISITIONS HAVE BEEN AN IMPORTANT PART OF YOUR STRATEGY. I THINK THEY'RE POINT WOULD BE IT IS ONLY 6% ORGANICALLY AND THEREFORE DOESN'T DESERVE ANY MORE THAN A 20 MULTIPLE.

PAPA: YEAH, BUT I DO THINK THAT WHAT WE HAVE BEEN ABLE TO DO NOW ESPECIALLY IS BUILD ON AND BRING IN SOME ADDITIONAL BUSINESS INTO OUR COMPANY. SO FOR EXAMPLE, ON MARCH 30th WE CLOSED THE OMEGA COMPANY AND BROUGHT THAT INTO OUR BUSINESS. WE MOVED FROM COMPETING IN 6 COUNTRIES GLOBALLY TO 39 COUNTRIES. OMEGA IS VERY IMPORTANT PLATFORM FOR US TO BE SUCCESSFUL FOR THE FUTURE OF OUR COMPANY. SO FOR THAT REASON, WE THINK WE'VE GOT A VERY BRIGHT FUTURE AND ONE THAT WE BELIEVE OUR SHAREHOLDERS WILL REJECT THE MYLAN OFFER.

FABER: JOE, YOU AND I HAVE HAD THE OPPORTUNITY TO SPEAK OFF CAMERA A BIT. AND I TALKED TO YOU ABOUT MATH. AND I'LL SAY IT AGAIN HERE, MATH SAYS THAT THERE ARE ENOUGH SHAREHOLDERS IN YOUR COMPANY WHO ARE HEDGE FUNDS OR LONG ONLYS WHO OWN BOTH MYLAND AND PERRIGO, THAT IT IS GOING TO BE VERY HARD FOR YOU TO AVOID THEM WHEN THEY TENDER INTO THIS DEAL ASSUMING THEY DO. DOESN'T SIMPLE MATH SAY YOU'RE NOT IN A GOOD POSITION HERE TO WIN?

PAPA: WE THINK THAT THE FINANCIAL MATH IS VERY STRONG IN OUR CASE. DILUTIVE TRANSACTION ON THE GROWTH RATE. IT IS GOING TO BE DILUTIVE TO OUR EARNINGS PER SHARE. THE PREMIUM IS MEAGER AT BEST. FOR THOSE REASONS, WE THINK OUR SHAREHOLDERS WILL MAKE A VERY RATIONAL DECISION. AND IMPORTANTLY, IF THEY JUST HOLD ON FOR A VERY SHORT TIME, WE'LL DELIVER RESULTS THAT ARE EVEN SUPERIOR TO THIS IN A VERY SHORT TIME WITHOUT THE RISK.

FABER: WHY?

PAPA: WHY?

FABER: YEAH, WHY ARE YOU GOING TO BE ABLE TO DELIVER SUPERIOR RETURNS WITHOUT THE RISK?

PAPA: WELL JUST BASED ON OUR NORMAL TRACK RECORD OF WHAT WE HAVE ACCOMPLISHED AS A COMPANY. WE BELIEVE WE WILL BE ABLE TO DELIVER THOSE SUPERIOR RESULTS IN A VERY SHORT TIME WITHOUT THE RISK. ONE OF THE IMPORTANT THINGS THAT MYLAN HAS NOT SAID IS THEY'RE TALKING ABOUT $800 MILLION OF SYNERGY. MY ENTIRE OPERATING EXPENSE BUDGET IS $1.2 BILLION. SO THEY ARE GOING TO HAVE TO TAKE A LOT OF COST OUT OF THAT SYSTEM. THE OTHER THING THAT THEY HAVEN'T TALKED ABOUT WHICH WE TALKED ABOUT TODAY IS THAT WE HAVE A BILLION DOLLARS OF REVENUE THAT IS SUBJECT TO CHANGE OF CONTROL PROVISIONS. IF THE PERRIGO COMPANY IS ACQUIRED, THOSE CHANGE OF CONTROL PROVISIONS WOULD KICK IN AND IN REALITY, THAT COULD CAUSE UP TO A BILLION DOLLARS OF POTENTIAL RISK THAT THEY HAVE NOT YET IDENTIFIED. WE THINK THAT IS IMPORTANT TO OUR SHAREHOLDERS, WE THINK THAT IS IMPORTANT TO OUR EMPLOYEES. AND FOR THAT REASON WE THINK THIS WILL BE REJECTED.

FABER: JOE, UNDER IRISH TAKE OVER LAW, YOU CAN'T DO SOMETHING TO SO CALLED FRUSTRATE THE OFFER, MEANING PERHAPS GOING OUT AND BUYING SOMETHING ELSE. BUT YOU CAN SELL YOURSELF TO THE HIGHEST BIDDER. WHY NOT HAVE GONE DOWN THAT ROAD?

PAPA: SO WE HAVE AND CONTINUE TO LOOK AT OUR STRATEGIC ALTERNATIVES. THERE ARE STILL THINGS THAT WE WILL CONTINUE TO LOOK AT. I THINK THE WAY THAT I WOULD PHRASE IT THOUGH IS THAT PRIOR TO MYLAN'S ARRIVAL, WE HAVE DONE IN THE NINE YEARS THAT I HAVE BEEN WITH THE COMPANY, WE HAVE DONE APPROXIMATELY 23 TRANSACTIONS. SINCE MYLAN ANNOUNCED ITS TRANSACTION, THIS OFFER ON APRIL THE 8th, WE HAVE DONE FOUR ADDITIONAL TRANSACTIONS. SO WE CONTINUE TO LOOK AT TRANSACTIONS. WE HAVE DONE THEM BEFORE, WE HAVE DONE THEM DURING AND WE ARE GOING TO DO THEM AFTER THIS GOES AWAY. SO WE CAN CONTINUE TO BELIEVE THAT A YEAR FROM NOW, IF I AM HERE A YEAR FROM NOW, WE WOULD BE A BIGGER COMPANY, A BETTER COMPANY, DRIVING SHAREHOLDER VALUE.

FABER: WELL A BIG SUPPORTER OF YOUR COMPANY IS JIM CRAMER WHO I KNOW HAS A QUESTION FOR YOU.

JIM CRAMER: JOE, I'VE GOT A QUESTION FOR YOU ABSOLUTELY. AIRGAS. WE REMEMBER THEM. PETER MCCAUSLAND, A PHILADELPHIA COMPANY. PETER ONCE TOLD ME WHEN AIR PRODUCTS MADE A BID, THAT IT LITERALLY PUT A LID ON THE STOCK AND THEN ONCE THE BID WENT AWAY, IT WOULD FLY. AND THAT IS EXACTLY WHAT HAPPENED. DO YOU THINK THAT MYLAN IS PUTTING A LID ON PERRIGO, WHICH HAD A PRETTY GOOD QUARTER?

PAPA: I DO THINK YOU ARE ABSOLUTELY – THERE IS A LOT OF TRUTH TO THAT, JIM. MYLAN HAS SOME PROBLEMS THAT THEY HAVE IDENTIFIED AND WE HAVE IDENTIFIED AS WE TALKED TO OUR SHAREHOLDERS. NUMBER ONE, THEY HAVE A LARGE PRODUCT CONCENTRATION RISK IN THE EPIPEN PRODUCT. IT IS A BILLION PLUS PRODUCT, ABOUT 11% OF THEIR REVENUE. THERE IS A CONCENTRATION RISK OF TEVA HAS ANNOUNCED THAT THEY WILL GET APPROVAL FOR A GENERIC ALTERNATIVE. THEY ALSO HAVE A RISK WHERE THEY ACQUIRED PRODUCTS FROM THE ABBOTT COMPANY. THOSE PRODUCTS HAVE IN ABBOTT'S HANDS BEEN DECLINING 9.4% A YEAR. SO THEY HAVE SOME VERY SIGNIFICANT REVENUE SHORT FALLS THAT WE THINK ARE HOLDING DOWN THE VALUE CREATION THAT WE HAVE AT THE PERRIGO COMPANY. SO WE ABSOLUTELY AGREE WITH YOUR STATEMENT, JIM.

FABER: AND FINALLY JOE, IT IS EARLY NOVEMBER, AND IT LOOKS LIKE YOU ARE GOING TO LOSE THIS THING. IS THERE A RIP CORD YOU CAN PULL TO DO SOMETHING OTHER THAN SELLING TO MYLAN?

PAPA: I THINK WE WILL CONTINUE TO LOOK AT ALL OF OUR ALTERNATIVES, DAVID. WE FEEL VERY STRONG ABOUT OUR STANDALONE CASE, BUT HAVING SAID THAT, WE HAVE DONE 27 DIFFERENT TRANSACTIONS IN THE NINE YEARS. SO WE WILL CONTINUE TO LOOK AT THAT. BUT AS WE LOOK AT THE DEAL FOR OUR SHAREHOLDERS, WE BELIEVE THIS IS A BAD DEAL. AND THAT IS REALLY HOW SIMPLE I CAN MAKE IT.

FABER: AND THOSE SHAREHOLDERS WILL DECIDE. JOE PAPA, VERY MUCH APPRECIATE YOU COMING TO VISIT WITH US TODAY.

PAPA: THANK YOU VERY MUCH, DAVID.

FABER: YOU'RE WELCOME. JOE PAPA, CHAIRMAN AND CEO OF PERRIGO.

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