Perrigo is working to reverse its recent fortunes--and it took a step Wednesday that it hopes will lead in that direction.
The Dublin drugmaker ($PRGO) announced it had agreed to snap up Geiss, Destin & Dunn, a Peachtree City, GA-based national distributor of OTC healthcare and consumer good products. While the move is “relatively small in transaction value” compared with some of Perrigo’s other recent forays into M&A, it’s one that’ll strengthen and diversify the company’s U.S. distribution and retail network, CEO John Hendrickson said in a statement.
Perrigo’s flagship OTC business could use a boost after a tough 2016 to date, Wells Fargo analyst David Maris wrote recently in a note to clients. Between February and August, at the midpoint, the company reduced consumer sales by about $335 million.
Perrigo’s prescription drug business “is far more profitable and has been growing much faster than the consumer business,” he wrote--though the branded portfolio is currently under its fair share of pressure, too, and may be in that position for another couple quarters until new launches roll around.
“Easy fixes appear evasive,” Maris wrote.
The recent performance--which has resulted in two forecast-lowerings since longtime CEO Joseph Papa jumped ship for Valeant’s helm--has angered some investors, who last month sued the company for allegedly making “false and misleading” statements about its financial condition. Those statements, in turn, persuaded them to nix a Mylan ($MYL) hostile takeover offer, they contend--and they now believe they would have been better off in the generics giant’s hands.
The performance has also gotten the M&A rumor mill up and running. In June, word on the street was that a mystery U.K. buyer could be eyeing a $20 billion Perrigo buy, and GlaxoSmithKline’s ($GSK) name was floating around as a potential suitor.
Meanwhile, Perrigo isn’t the only drugmaker looking to distribution buys to spark growth. Earlier this month--after the close of its $40 billion buy of Allergan’s generics business--Teva ($TEVA) agreed to also pick up the company’s Anda, the fourth-largest drug distributor in the U.S.
- read the release
Teva wants Allergan's distribution biz now that $40B drug deal has closed
Shareholders sue struggling Perrigo for 'misleading' them away from Mylan buy
Perrigo up for $20B sale to mystery U.K. buyer: report
Valeant investors fret as new Perrigo CEO slams Papa's performance
It's official: Pearson out, Papa in as Valeant CEO
Perrigo pushes forward with Ireland expansion as sales, earnings lag
Perrigo to slash 800 jobs, buy back $2B of its stock in move to fend off Mylan
Just wait, Perrigo investor urges. We can get the same return--without a Mylan deal