Perrigo in Expansion Mode

Zacks

Perrigo Company (PRGO) recently announced that it is set to acquire a UK-based privately held pharmaceutical company, Rosemont Pharmaceuticals Ltd. and has entered into a definitive merger agreement for the same. The deal is valued at $283 million.

By acquiring Rosemont Pharma, Perrigo aims to strengthen its position in the UK oral liquid formulations space. Rosemont Pharma boasts of a portfolio of more than 90 products. The company generated net sales of more than $60 million in 2012.

The deal is expected to boost Perrigo’s adjusted earnings in fiscal 2013 by $0.08 per share. Perrigo now expects fiscal 2013 earnings in the range of $5.53 – $5.73 per share (previous guidance: $5.45 – $5.65 per share). The Zacks Consensus Estimate of $5.56 per share is towards the lower end of the company’s guidance range.

We note that Perrigo has been quite active on the acquisition front lately. In a bid to strengthen its position in the over-the-counter (:OTC) retail pet healthcare market, just a few days back Perrigo inked a deal to buy animal health company Velcera, Inc. for $160 million in cash. The deal is expected to close in calendar year 2013.

In Dec 2012, Perrigo acquired privately-held Cobrek Pharmaceuticals, Inc. for approximately $45 million in cash. In Oct 2012, Perrigo had acquired the entire assets of privately-held Sergeant's Pet Care Products, Inc.

Perrigo, which develops, manufactures and distributes OTC and generic prescription pharmaceuticals among others, carries a Zacks Rank #3 (Hold). Other players in the generic market, such as Mylan Inc. (MYL) and Pernix Therapeutic Holdings, Inc. (PTX), carry a Zacks Rank #2 (Buy). Meanwhile, biopharma stock, Valeant Pharmaceuticals (VRX) has a Zacks Rank #1 (Strong Buy).

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