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Clock ticking on hostile health-care takeover

A fierce battle between two health care companies is coming to a head this week.

Perrigo, a global supplier of generic and over-the-counter drugs, has been fending off a hostile takeover from rival Mylan for months. Under increasing pressure, Perrigo released a statement Monday urging shareholders to reject Mylan's offer to buy Perrigo on Friday.

"This is a bad deal for the Perrigo shareholders," Perrigo CEO Joseph Papa told CNBC's "Squawk on the Street" on Monday.

Management at Perrigo cites Mylan's governance standards as a reason for shareholders to reject the bid. Mylan is being investigated by the SEC regarding disclosure of real estate deals, The Wall Street Journal reported.

The deal includes 2.3 shares of Mylan, trading at $45, and $75 in cash for each share of Perrigo. It's a premium on Perrigo's shares, which now trade at $158, but Papa said it's not enough.

"Given what we have talked about for our 2016 numbers, we believe we can achieve much of what they've suggested without the risk of a merger, which we believe is sizable," Papa said.

Papa said if the deal went through, it would dilute Mylan's earnings for at least three years and slow Perrigo's growth rate.

But Mylan CEO Heather Bresch told CNBC last month the deal was compelling for shareholders.

"I think there's going to be a lot of volatility in the health-care market for a while," Bresch said. "So I think as shareholders step back and say, 'It'd be better to be part of a larger base that could absorb that volatility,' ... I feel very confident we are going to get the tenders."

Papa said he estimates that 80 percent of his shareholders intend to vote against the deal, though he's still working to convince some hedge funds.

"We believe the right thing to do, as a standalone company, is look at continuing to grow our business by 5 to 10 percent organically, [and] supplement that with new products," Papa said. "We believe we'll launch over a billion dollars in new products over the next three years, and, of course, look at inorganic opportunities to supplement, just like we've done in the past. That, we think, is going to continue to generate more value for shareholders in the long term."

Shares of Perrigo were down 2.4 percent Monday afternoon, but are up about 2 percent over the past year. Shares of Mylan dipped 1 percent and have plunged more than 15 percent on the year.