Perrigo Company Public Limited Company PRGO announced that it has entered into an agreement to acquire a portfolio of over-the-counter (OTC) brands from the consumer healthcare division of GlaxoSmithKline plc GSK.
GlaxoSmithKline has to divest these businesses as mandated by the European Commission and other regulatory bodies in context of the formation of a consumer health joint venture between Glaxo and Novartis AG NVS.
Perrigo will acquire Glaxo’s NiQuitin nicotine replacement therapy business, primarily in the European Economic Area (EEA) and Brazil, and Novartis's legacy Australian NRT business, including the Nicotinell brand. In addition, Perrigo will acquire various assorted OTC brands including Coldrex (cold and flu treatment) across the EEA, and Panodil (pain relief), Nezeril (nasal decongestant) and Nasin (nasal decongestant) in Sweden. The company will also obtain Novartis's legacy cold sore management products primarily in the EEA, marketed under the brand names Vectavir, Pencivir, Fenivir, Fenlips and Vectatone.
All assets will be acquired through an all-cash transaction. The purchase price of the acquisition was, however, not disclosed. The acquisition is expected to be immediately accretive to Perrigo's bottom-line.
We note that Perrigo is currently focused on its OTC business. The company acquired Omega Pharma in Mar 2015. The acquisition of Glaxo’s assets will enable the company to capture an even greater share of the $30 billion OTC market opportunity in Europe with several well-established, complementary brands bolstering its existing portfolio. Perrigo expects to strengthen its global OTC platform further with this acquisition.
Earnings accretion from recent acquisitions should help the company offset the dismal performance at Nutritionals and API segments to some extent.
Perrigo carrries a Zacks Rank #4 (Sell). A better-ranked stock in the health care sector is Actelion Ltd. ALIOF which currently sports a Zacks Rank #1 (Strong Buy).
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