Perrigo sells generic drug business for $1.55 billion

Perrigo Company has sold its generic drug business.

The Allegan County, Pa.-based pharmaceutical company, which is domiciled for tax purposes in Ireland, announced Monday morning that it would offload the Generic Rx Pharmaceuticals business to New York-based private investment firm Altaris Capital Partners LLC for a total of $1.55 billion.

Perrigo said the deal includes $1.5 billion in cash and that Altaris will assume in excess of $50 million in potential milestone payments related to research and development, as well as contingent purchase obligations with third-party partners the company works with, according to a news release.

The sale of the business unit will provide Perrigo with upward of $2 billion in available cash and serves as part of a “transformation plan” as the company has shifted toward more self-care products.

“The sale of our Generic Rx business is the most impactful step in Perrigo’s transformation plan,” Perrigo President and CEO Murray Kessler said in the release. “This transaction establishes Perrigo as a pure-play global consumer self-care company with industry leading fundamentals. Perrigo Consumer Self-Care will have a focused portfolio with over $4 billion in revenues focused on the growing trends towards self-managed health and wellness. This transaction also provides the company with increased financial predictability and flexibility.”

Altaris makes for “an ideal owner to maximize the future potential of the Rx business, which has made important contributions to Perrigo and to the health of patients,” Kessler said, adding his thanks to the employees who have been part of the Generic Rx business.

“Given our experience in the pharmaceutical sector and track record of corporate carve-out transactions, we believe we are well-positioned to support the Rx business as it becomes a standalone company focused on its mission of developing and marketing affordable pharmaceutical products,” Garikai Nyaruwata, Altaris managing director, said in the release.

Subject to customary closing conditions, the deal is expected to close by the end of the third quarter of this year.

In an earnings statement Monday, Perrigo reported a loss of $175 million in its fourth quarter.

On a per-share basis, the company said it had a loss of $1.29. Earnings, adjusted for one-time gains and costs, were 93 cents per share.

The results fell short of Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $1.01 per share.

The drug company posted revenue of $1.29 billion in the period, also missing analyst forecasts. Five analysts surveyed by Zacks expected $1.33 billion.

For the year, the company reported a loss of $162.6 million, or $1.19 per share, swinging to a loss in the period. Revenue was reported as $5.06 billion.

The company’s stock was trading up nearly 6 percent Monday afternoon, with a share trading at nearly $43, giving the company a market cap of more than $5.8 billion.

Long based in Allegan between Grand Rapids and Kalamazoo, Perrigo announced last year that it would invest $44.8 million to build a new corporate headquarters in downtown Grand Rapids, near Michigan State University’s Innovation Park.

This story first appeared in our sister publication, Crain’s Detroit Business.


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