Perrigo Flying High Despite Losing Leiner Bidding War Last Year


Perrigo Co.—one of the top-five supplement sellers in the United States, according to Nutrition Business Journal sales estimates—announced record earnings for the first quarter of its fiscal year ended September 26, 2009. Perrigo’s net sales shot up 16% to $528 million, with its store brands growing nearly 13% and its over-the-counter (OTC) category growing 3%. Perrigo’s consumer healthcare division—which supplies more than 15 categories and 500 formulas including OTC remedies, dietary supplements and nutritional drinks—added $71 million in new sales for the quarter, an increase of 19%.

The company attributes the increase in its consumer healthcare division to new product sales, higher volume of existing product sales and acquisitions of JB Laboratories, Unico and Diba, which accounted for $36 million in incremental sales. It’s possible that Perrigo could have posted an even more impressive earnings sheet had it been able to outbid NBTY and acquire Leiner Health Products in bankruptcy court in June 2008. Perrigo was reportedly the next highest bidder in the attempts to acquire Leiner—and winning the bid would have immediately bolstered the company’s private-label foothold. During the bidding process, NBTY was able to write in a $5.75 million breakup fee and a clause requiring expense reimbursement up to another $1.15 million in return for being the stalking horse for the auction. The breakup fee would have required Perrigo, or any acquiring company other than NBTY, to add an additional $6.9 million onto the winning bid—something that ultimately helped NBTY secure the transaction with a winning bid of $371 million.

Perrigo continues to actively manage its assets. The company announced on November 2 that it reached an agreement to sell its Israel consumer products business and all of the related assets to Emilia Group, a subsidiary of O. Feller Holdings Ltd., for 205 million New Israeli Shekels (approximately $54 million). The company also announced that it will pay a quarterly dividend of $.0625 per share on December 15 to shareholders of record on November 27. That represents a 12% increase from the previous four quarters.

According to the company’s chairman and CEO, Joseph C. Papa, Perrigo is well positioned for continued growth in 2010. “Fiscal 2010 is off to a very strong start,” Papa said. “We achieved all-time record earnings in a macroeconomic environment that is favorable to Perrigo's business model. All of our segments are executing well with no one single product or division driving these strong results.”

Related NBJ links:
M&A and Investment Activity Slows for U.S. Nutrition Industry
NBTY Pays $371 Million for Troubled Leiner Health
NBTY Reports Solid Q2 Sales Growth, Investors Take Notice

Related Functional Ingredients magazine links:
Top Tips for Working with a Contract Manufacturer


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