ALLEGAN — Perrigo Co. plc intends to use the proceeds from the sale of its animal health business to buy Ranir Global Holdings LLC, a Grand Rapids-based maker of oral care products.
The deal announced this morning to buy Ranir for $750 million comes a day after Perrigo said it planned to sell the animal health business for $185 million in cash to PetIQ LLC, an Eagle, Idaho-based pet health and wellness company, as MiBiz previously reported.
Both deals are part of a far broader plan to transform Perrigo (NYSE: PRGO) — which is domiciled in Dublin, Ireland, but run from Allegan — into a company focused on consumer health care products and medications.
“The addition of Ranir to the Perrigo family illustrates a key component of our new strategy, accelerating growth by pursuing adjacent self-care categories,” Perrigo President and CEO Murray Kessler said in a statement. “I can’t emphasize enough the opportunity we believe exists by combining these two companies that are so closely aligned. This is highlighted by their geographic proximity, scale in store brands, leading market shares, strong and complementary customer relationships, a focus on quality, similar company cultures and a shared belief in the opportunity presented by the self-care mega-trend.”
Ranir’s lineup of more than 300 products includes manual toothbrushes, power toothbrush heads and handles, whitening strips, dental floss, dentures and travel kits sold in more than 50 countries.
Ranir, which employs about 650 people, generated $218 million in sales for 2018.
The companies expect the deal to close in the third quarter.
“We’ve worked hard over the past several years to execute a comprehensive growth plan to advance our purpose of ‘Delivering Millions of Affordable, Healthy Smiles’ every day. As part of this plan, we are taking the next step in our transformation, while remaining fully committed to our heritage and values,” Ranir President and CEO Rich Sorota said in a statement. “Our two companies are immensely complementary and aligned in our greater purpose and mission. Our combined talents, scale, global presence, innovation, and understanding of self-care will help support not only our local communities, but also our suppliers, retail partners and their consumers. This ultimately enables us to better pursue our purpose worldwide.”
Perrigo’s planned acquisition of Ranir is one element of a sweeping transformation plan for the company. Directors at Perrigo have committed more than $1 billion to carry out the plan in a move to restore growth and improve profitability, both of which have lagged in recent years.
Shares of Perrigo trade at nearly a third of the price of four years ago. The stock started today at $51.98 per share and by mid-morning was up more than 4 percent.
In unveiling the plan today to investors, Perrigo reiterated its intention to sell off and exit its generic drug business. Murray told investors this morning in a presentation that the company was in active discussions with potential buyers.
Other elements of the plan include:
- Investing more than $250 million in capacity and technology over four years in infant nutrition and tablet manufacturing to meet growing demand.
- Driving growth in e-commerce.
- Initiating a $100 million annualized cost savings program called “Project Momentum” to help drive performance higher.
- “Power brand” partnerships through licensing agreements with a “global leader” in natural products.
- Centralizing R&D by creating an innovation group that has identified 40 new initiatives with about $500 million in potential future pipeline products.
- Investing in what the company called “transformative innovations.” Perrigo cites as an example a letter of intent for a small investment in vapor dosing technology that includes a device that learns a patient’s behavior.
- “Actively pursuing” CBD, or cannabidiol, from cannabis plants. Perrigo is in “active discussions with several leading CDB companies to identify the best partner to create high-quality, reliable CBD products” and enter a market that’s growing 50 percent a year and is expected to reach $2 billion by 2020.
On Wednesday, Perrigo said it generated $1.17 billion in first quarter sales, down slightly from $1.21 billion in the same period a year earlier. Perrigo recorded $63.9 million in quarterly net income, or 47 cents per diluted share, which compares to $80.8 million, or 57 cents per diluted share, in the first three months of 2018.
The company issued guidance for 2019 full-year sales of $4.6 billion to $4.7 billion with net income of $1.24 to $1.54 per share.
Perrigo for 2018 reported sales of $4.7 billion with net income of $131 million, or 95 cents per diluted share.