Luck of the Irish: Perrigo Co Buys Belgium’s Omega Pharma
Luck of the Irish: Perrigo Co Buys Belgium’s Omega Pharma
Irish healthcare company Perrigo Co Plc has indicated that it will acquire Belgium’s Omega Pharma. The transaction was carried out for an amount of 2.48 billion Euro which amounts to USD 3.11 billion. This excludes debt.
Perrigo will now expand and grow in areas other than its existing strengths. Reuters has indicated that the company will now expand its over-the-counter products portfolio through this acquisition.
Perrigo has also announced that it will take the 1.1 million Euro debt Omega is currently holding. Privately owned Omega had been struggling with debt issues for some time now. Over-the-counter drugs offer lesser margins than prescription drugs yet the demand for them is higher because they are more affordable.
Prescription-free medicines are sold by Omega along with healthcare products and personal care items such as lotions and treatments for skin. Omega specialises in OTC drugs and these offer lower margins than prescription drugs. However, the demand for these types of medication is higher because they are cheaper.
Reuters reported in the month of July that Omega taken in private by CEO Mark Coucke and private equity firm Waterland in the year 2011, had Morgan Stanley oversee a potential sale. Perrigo stated that it will place 5 million shares with Coucke and fund the rest through cash as well as debt represent 25% of the equity value of the deal. Perrigo currently has 133.9 million shares outstanding as on September 27, according to Reuters.
The Irish firm also said the deal would add to adjusted earnings, says Reuters. Perrigo also announced that it had secured a 1.75 billion euro credit facility from J.P. Morgan and Barclays who were both financial advisers for the deal. The legal adviser of this firm was Freshfields Bruckhaus Derringer. Omega’s financial adviser was Morgan Stanley and its legal adviser was Allen & Overy, says Reuters.
WSJ said that the acquisition was also a move to expand the portfolio of OTC drugs and broaden the market presence throughout Europe. The companies also said that of the 3.6 billion Euro or $4.5 billion, 2.48 billion euros in equity and 1.1 billion euros in debt were included. Though 25% of the equity price will be paid in Perrigo stock to Marc Coucke, the remaining 75% will be funded through a blend of cash and debt, said WSJ.
Omega is the fifth largest entity in the European OTC market currently, according to Wall Street Journal. It has a massive portfolio of around 2,000 products including treatments for stomach ailments and cold. According to WSJ, this deal will now make Perrigo the fifth largest player in the OTC market. CEO Joseph Papa indicated during a call with the investors that “Omega instantly enhances our scale and broadens our footprint, providing us with immediate access to an established commercial network.”
Perrigo was formed in 1887 and it manufactures and distributes over-the-counter and prescription medicines, nutritional products as well as pharmaceutical ingredients. After purchasing Elan Corp, it shifted to Ireland, according to Bloomberg.
