DUBLIN - Perrigo Company plc (NYSE:PRGO), a global player in consumer self-care products, has entered into a binding offer with Esteve Healthcare, S.L., a Barcelona-based pharmaceutical company, to divest its HRA Pharma Rare Diseases business. The deal is valued at up to €275 million, including €190 million in cash upfront and up to €85 million in potential earnouts contingent on sales milestones.
The transaction is expected to complete in the third quarter of 2024, subject to consultation with the HRA Pharma Works Council in France and customary closing conditions, including regulatory approvals. Perrigo's decision to sell its rare diseases segment aligns with its strategic emphasis on expanding its consumer self-care portfolio.
Patrick Lockwood-Taylor, President and CEO of Perrigo, remarked that the divestiture would bolster the company's focus on fast-moving consumer goods and facilitate debt reduction, aiming for a net leverage ratio below 4.0x by year-end. Lockwood-Taylor also expressed gratitude to the HRA Rare Diseases team for their commitment.
Esteve's CEO, Staffan Schüberg, highlighted the acquisition's alignment with their mission to address unmet medical needs and their vision of becoming an international specialist pharma company.
The financial advisors for the transaction are Morgan Stanley (NYSE:MS) & Co. LLC for Perrigo and Perella Weinberg Partners for Esteve. Legal counsel for the parties are Wachtell, Lipton, Rosen & Katz, and Clifford Chance, respectively.
HRA Pharma Rare Diseases, a Perrigo affiliate, has been recognized for its work in rare and ultra-rare diseases, with a focus on Cushing's syndrome and Adrenalcortical Carcinoma (ACC). Esteve, on the other hand, has a significant presence in Europe and specializes in addressing unmet medical needs, with facilities in Spain, Mexico, and China, and a pharmaceutical plant in Germany.
This proposed divestment was included in Perrigo's previously issued 2024 outlook, and the company has indicated that the expected net proceeds would be used to repay debt. Perrigo has cautioned that forward-looking statements in the press release involve risks and uncertainties, and actual results may differ materially.
The information in this article is based on a press release statement from Perrigo Company plc.
InvestingPro Insights
Perrigo Company plc (NYSE:PRGO) is navigating through a strategic shift with its recent announcement to divest its HRA Pharma Rare Diseases business. This move is an effort to streamline the company's focus on consumer self-care products. To provide further context on Perrigo's financial health and future prospects, we draw upon key metrics and insights from InvestingPro.
InvestingPro Data shows a market capitalization of $4.23 billion, reflecting the company's size within the pharmaceutical sector. Despite a negative P/E Ratio of -327.87, the adjusted P/E Ratio for the last twelve months as of Q4 2023 stands at 132.61, indicating investor expectations for future earnings growth. Moreover, the company's revenue growth for the same period is 4.58%, which, while modest, shows a positive trajectory in sales.
InvestingPro Tips offer a deeper dive into Perrigo's performance and outlook. Notably, the company has raised its dividend for 21 consecutive years, demonstrating a commitment to returning value to shareholders.
This consistent performance is underscored by a dividend yield of 3.54% as of early March 2024. Moreover, analysts predict that Perrigo will be profitable this year, which could be a significant turnaround from the lack of profitability over the last twelve months.
For readers interested in a comprehensive analysis of Perrigo's financials and future potential, there are additional InvestingPro Tips available. These tips provide an in-depth look at factors such as free cash flow yield and net income growth expectations.
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