Project Description

Spin-off Overview

On August 9, 2018, Perrigo (PRGO) announced that it would be separating its pharmaceutical business. Potential options include a tax free spin-off, merger, or sale. Expected timing is Q3 2019.

Source: Perrigo Slide Deck

Background:

From WSJ:

Perrigo plans to shed its prescription pharmaceutical unit, which accounts for about one-fifth of total revenue, following a strategic review of its portfolio

Perrigo, which makes private-label products such as cold medicines and infant formula, said Thursday its board believes the separation would create shareholder value and allow the company to focus on expanding its consumer business. The board will consider a tax-free spinoff of the unit, a sale or a merger. Perrigo said it plans to complete the separation in the second half of 2019.

Sales of Ireland-based Perrigo’s prescription business, which makes generic topical medicines, have fallen in each quarter since the March 2016 period. In the latest quarter, sales fell 13% to $208.6 million. Uwe Röhrhoff, who became chief executive officer in January, said the business performed below expectations as it had fewer new product launches and faced “challenging market dynamics.” He also expects those challenges to carry on in the second half of this year.

Activist investor Starboard Value LP, which owns 7.3% of Perrigo shares, pushed the company last year to undergo a strategic review of its businesses. It also put five directors on Perrigo’s board, including Starboard CEO Jeffrey Smith. Starboard said it wanted the company to focus on its core business of over-the-counter drugs.

Company Resources:

Press Release – August 9, 2018

Slide Deck – July 19, 2018

Articles

WSJ – Perrigo to Separate its Prescription Pharma Business – August 9, 2018