Perrigo Co. plc’s $750 million acquisition of Ranir Global Holdings LLC brought together two companies that essentially were following the same path when their CEOs decided to talk business toward the end of 2018.
RANIR GLOBAL HOLDINGS LLC
Top executive: Rich Sorota, president and CEO
Annual sales: $287 million in 2018
Full-time employees in West Michigan: 450 locally, 650 overall
Brief business description: Producer of store-brand and private-label oral care products
Advisers: William Blair & Co. LLC (financial), Kirkland & Ellis LLP (legal)
The Grand Rapids-based Ranir produces more than 300 store-brand and private-label oral care products sold at many of the same retailers that carry Perrigo-produced over-the-counter store-brand medications and other products that cost less than brand-name counterparts. Both companies were driving a “self-care” strategy, producing products that enable consumers to take care of their own health.
In their initial conversations, Ranir President and CEO Rich Sorota and Perrigo CEO Murray Kessler each saw the potential they had together to pursue the $450 billion global self-care market.
“I believe our retail partners see the rising cost of health care and they’re looking for ways to bring solutions to their consumers,” Sorota said. “When you look at what we’ve accomplished in oral care and what Perrigo has accomplished in broader categories and collectively where we can try to really shape things, it’s more important than it’s ever been as it relates to the rising cost of health care.”
Perrigo and Ranir announced their all-cash deal in May and closed the transaction at midyear. The deal won the health care category in the 2019 MiBiz M&A Deals of the Year Awards.
The acquisition began coming together as Murray was just two months into his tenure and prepared to implement a sweeping $1 billion plan to transform Perrigo into a “self-care” company and restore sales and earnings growth.
In Ranir, Perrigo gained an immediate and major presence in the global oral care market. Ranir already was well down the self-care pathway that Kessler charted and outlined to investors in May. The similarity in strategies made the acquisition attractive, Kessler said.
In an investor presentation the day the deal was announced, Kessler called Ranir “a spectacularly aligned company” with Perrigo.
“There is self-care language all through this company, and they get it,” Kessler said.
Ranir produces manual toothbrushes, power toothbrush heads and handles, whitening strips, dental floss, dentures and travel kits sold in more than 50 countries, and employs about 650 people, 450 of them in Grand Rapids. The company generated $287 million in sales for 2018 and since 2002 averaged compound annual growth rates of 15 percent for sales and 22 percent in earnings before interest, taxes, depreciation, and amortization (EBITDA).
Becoming part of Perrigo gave Ranir a new owner with a global footprint and greater capabilities to further grow and develop new products, Sorota said.
“We have some transformative innovations that we frankly would not be able to do if we weren’t part of Perrigo,” he said. “There are specific categories that make a lot of sense for us to be in, but they require some great technology, scale and innovation. We will be more successful on some of our longer-term, critical initiatives because we are part of Perrigo.”
Ranir became part of Perrigo’s North American business unit. Sorota runs the oral care business and contributes to Perrigo’s self-care transformation, working with leadership to “help us move the Perrigo self-care growth agenda forward globally.”
Fully integrating the two companies could take years to complete, Sorota said. A steering committee on which Sorota serves leads the process, which has involved numerous town halls with employees globally.
Founded in 1979, Ranir sold in 2008 for $100 million to a group of investors in partnership with Camden Partners Holdings LLC, a Baltimore, Md.-based private equity firm. In recent years, owners initiated a growth strategy to position the company for a sale.
Sorota talked several times over his four-year tenure at Ranir with Jeff Needham, the president of Consumer Self Care Americas at Perrigo, “who thought it would be really valuable” for him to meet Kessler, Sorota said.
The two found they were “just wired in very similar ways as it relates to the big opportunity called self-care,” paving the way for the acquisition, Sorota said.
Ranir itself made five acquisitions in recent years to drive growth. In any deal, leadership needs to ensure it makes sense strategically and that the culture and value of the two companies coming together are aligned.
“Does it make sense? Is it something that comes together nicely? Where are the opportunities to create more value?” Sorota said. “Deals make sense when they create value and have a high probability of doing so. That’s why (the Perrigo deal) made so much sense.”
Now operating as one, Perrigo and Ranir together have an appetite for further acquisitions to drive growth.
“One of the common bonds of both of our companies is Perrigo is also as committed as Ranir was in M&A,” Sorota said. “That will continue to be an important part of our growth agenda.”FINALIST
FINALIST: Spectrum Health expands to SW Michigan with deal for Lakeland Health
The acquisition of Lakeland Health in St. Joseph extended Spectrum Health’s footprint into Southwest Michigan.
Lakeland Health, the largest acquisition ever for the Grand Rapids health system, became a separate business unit of Spectrum Health when the deal closed on Oct. 1, 2018. That’s a key difference from past acquisitions, when acquired hospitals became part of Spectrum’s Hospital Group.
Lakeland Health included hospitals in St. Joseph, Niles and Watervliet, plus 46 ambulatory care sites, nearly 500 doctors and advanced practitioners, and 4,160 employees.
The deal was the latest acquisition in the history of Spectrum Health, which now operates 14 hospitals, 155 ambulatory sites and telehealth offerings, and the health plan Priority Health.
During the first year, Spectrum and Lakeland have prioritized integrating administrative and clinical operations with a focus on reducing costs, improving quality and providing “even greater value to the community,” Spectrum Health President and CEO Tina Freese Decker said. The two have already generated $20 million in cost savings for Lakeland, mainly through supply chain expenses, putting purchases under a single contract and identifying duplications.
“This integration, we approached it from a very different perspective than previous integrations. Collaboration and value were the key measures of success,” Freese Decker said. “We believe this focus on value in a collaborative way enables the conversations to first be spent on being curious to learn about both organizations, and then implement the best way possible for the overall organization. That collaborative approach has delivered a greater impact for years to come.”