Perrigo to Acquire HRA Pharma
- Transaction would complete Perrigo’s three-year transformation plan to become a global leader in consumer self-care; positions Perrigo to deliver top-tier net sales growth and double-digit EPS growth, with significant margin expansion.
- Would add HRA’s focused portfolio of market leading, high growth OTC self-care brands in blister care, women’s health and scar care to Perrigo’s expert direct go-to-market platform.
- Acquisition of HRA for €1.8 billion, or approximately $2.1 billion(1), in cash would represent an enterprise value to expected 2022 adjusted EBITDA multiple of 18x. Adding anticipated synergies expected by 2023 on a pro forma basis, purchase price would represent an adjusted EBITDA multiple of less than 14x.
- Would significantly strengthen Perrigo’s global footprint by adding scale in key European markets.
- Overlap with existing geographies expected to provide significant and actionable operational synergies.
- Transaction is anticipated to accelerate results for both Consumer Self-Care segments and be immediately accretive to Perrigo, adding approximately €400 million in net sales and approximately $1.00 in adjusted EPS in FY 2023.
- HRA’s seasoned leadership team will remain in place to minimize any business disruption from integration.
- Conference call and webcast scheduled for today, September 8, 2021, at 8:30 A.M. EDT to discuss transaction.
(1) Assumes euro/dollar exchange rate of €1.00/$1.19 as of September 7, 2021.
DUBLIN, IRELAND, Sept. 8, 2021 (PRNewswire) – Perrigo Company plc (NYSE, TASE: PRGO) (“Perrigo” or the “Company”) today announced that it has signed a binding offer to acquire Héra SAS (“HRA” or “HRA Pharma”), a leading global consumer self-care company, from funds affiliated with private equity firm Astorg and Goldman Sachs Asset Management. The transaction is valued at €1.8 billion, or approximately $2.1 billion in cash. HRA is one of the fastest growing over-the-counter (“OTC”) companies globally, with three category-leading self-care brands in blister care (Compeed®), women’s health (ellaOne®) and scar care (Mederma®). This scale acquisition would complete Perrigo’s transformation to a global leader in consumer self-care, bolster its presence in high-potential European markets and meaningfully improve its already strong operational and financial profile.
“Over the last two and one-half years, we have been on a journey to transform Perrigo into a focused and high-performing consumer self-care company, all while delivering a successful track record of well executed acquisitions and divestitures. The acquisition of HRA would be the crowning achievement in that transformation. With the addition of HRA and its talented leadership team, Perrigo would be a consumer self-care global leader that is poised to deliver top tier net sales growth and double-digit EPS growth in the near-term while concurrently expanding margins,” said Murray S. Kessler, CEO and President, Perrigo. “Importantly, HRA’s focused portfolio of fast-growing self-care brands, which are market share leaders in growing categories, would be accretive to Perrigo’s 3% revenue growth goal. And, HRA’s expertise in migrating products from prescription to OTC would represent even further upside. The complementary geographic footprint of HRA to that of Perrigo would allow for significant and actionable synergies. And it is the totality of these factors that makes the combination of Perrigo and HRA strategically and financially compelling. It’s literally a one-of-a-kind opportunity to simultaneously enhance our financial profile, while driving even greater value for consumers, shareholders and the communities in which we work and live.”
“I’m incredibly proud of the hard work of the HRA team, who have helped establish the company as a world-class organization – one positioned to embark on the next chapter of its journey as part of the Perrigo family,” said David Wright, CEO, HRA. “Perrigo is the ideal partner to continue growing these brands across the globe and into attractive adjacent categories, as we build on Perrigo’s platform and sizable product portfolio. We are excited about the opportunity to join the Perrigo team and with a shared vision and principles, deliver on the tremendous value opportunity of the combined business. As one of the world’s leading self-care companies, Perrigo is uniquely positioned to advance these brands for years to come.”
The addition of HRA would strengthen Perrigo’s OTC self-care offerings and expand its portfolio with highly recognizable consumer brands in their respective categories, including:
- Compeed® – a well-known and trusted global OTC brand with leading market share that offers a wide variety of high-quality innovative solutions for preventing and treating blisters, bunions, calluses, corns and cracked heels, as well as its recent successful entry into cold sores as part of its strategy to expand into adjacencies including wound care;
- ellaOne® – a women’s health OTC emergency contraception brand with leading market share, that is available without a prescription in 59 countries;
- Mederma® – the leading U.S. OTC scar care brand with high-quality solutions for reducing the appearance of scars, stretch marks and cold sores.
Separately, approximately 15% of HRA’s net sales are derived from a rare disease portfolio of three leading prescription products.
HRA would also bring expertise and a successful track record in leading the switch of prescription-to-OTC women’s health products, evidenced by ellaOne® emergency contraception achieving OTC status in 59 countries. Of note, the HRA team recently received approval and launched Hana®, a once-daily OTC oral contraceptive in the U.K. This represents the first OTC approval of a daily oral contraceptive in the U.K.
This transaction would bolster Perrigo’s footprint in its European markets while adding scale to its operations in key underpenetrated European markets, providing significant opportunities for additional growth.
The transaction would enable Perrigo to deliver substantial value by improving its financial profile, including growth, margins, earnings and cash flow. It would also advance Perrigo’s long-term goal to align its growth profile at the high-end of the world’s top-tier consumer packaged goods companies.
HRA’s net sales growth is expected to be in the mid-teen percentage range, with an adjusted operating margin near 30%range.
Perrigo would plan to save more than €30 million annually by 2023 from unlocking meaningful operational synergies from this transaction. Perrigo would use its existing global infrastructure to achieve selling efficiencies, streamline logistical efforts and reduce overlapping fixed costs. These synergies, along with HRA’s strong market position and attractive financial profile, are anticipated to add approximately €400 million in net sales and $1.00 in adjusted EPS in FY 2023.
After thorough consideration of capital allocation alternatives, Perrigo believes this acquisition to be the most compelling use of its capital based on the return on investment, internal rate of return and net sales growth, margin and earnings accretion compared to other alternatives.
Perrigo has signed a binding offer to acquire HRA in a cash transaction valued at €1.8 billion, or approximately $2.1 billion, on a cash-free, debt-free basis. The agreement between Perrigo and the selling shareholders would be finalized following the information and consultation process with HRA’s Works Council in France then enabling the applicable selling shareholders to execute a put option granted by Perrigo. The proposed final transaction would close by the end of the first half of 2022, subject to the satisfaction of customary closing conditions, including regulatory approvals.
Perrigo would pay the purchase price using cash on hand at closing. In addition, Perrigo has full capacity available under its current credit facility and depending on market conditions, may also consider new debt financing. The closing of the acquisition would not be subject to a financing condition.
Perrigo Conference Call and Webcast
Perrigo will host a conference call and webcast today, September 8, 2021, at 8:30 A.M. EDT to discuss this transaction. The live conference call can be accessed via webcast to interested parties in the investor relations section of the Perrigo website at http://perrigo.investorroom.com/events-webcasts or by phone at 888-317-6003, International 412-317-6061, and reference ID # 4920640. A taped replay of the call will be available beginning at approximately 12:00 P.M. (EDT) September 8, 2021, until midnight September 15, 2021. To listen to the replay, dial 877-344-7529, International 412-317-0088, and use access code10160053.
Centerview Partners is serving as financial advisor to Perrigo. Wachtell, Lipton, Rosen & Katz and Darrois Villey Maillot Brochier are serving as its legal counsel.
Sawaya Partners, Goldman Sachs Investment Banking Division and Rothschild & Co. are serving as financial advisors to the selling shareholders. Latham & Watkins, LLP is serving as the selling shareholders’ legal counsel and Dechert LLP is serving as counsel to HRA management.
Perrigo Company plc (NYSE; TASE: PRGO) is a leading provider of Quality, Affordable Self-Care Products and over-the-counter (OTC) health and wellness solutions that enhance individual well-being by empowering consumers to proactively prevent or treat conditions that can be self-managed. Led by its consumer self-care strategy, Perrigo is the largest store brand OTC player in the U.S. in the categories in which it competes through more than 9,000 SKUs under customer ‘own brand’ labels. Additionally, Perrigo is a Top 10 OTC company by revenue in Europe, where it markets more than 200 branded OTC products throughout 28 countries. Visit Perrigo online at www.perrigo.com.
About HRA Pharma
HRA is a fast growing, innovative consumer healthcare company, empowering people throughout the world to improve their lives by developing accessible, value added, self-care solutions. The brand portfolio has continued to grow with a range of high-quality products in the area of consumer healthcare with a short and impressive timeframe.
Historically centered on women’s health, the company has continued to grow and has now become the European leader in emergency contraception. Its focus on Rx-to-OTC switches has seen the company grow in both strength and brand by being agile and innovative in its approach. HRA is committed to bringing a range of innovative products and services to market, particularly in areas of unmet customer needs. Headquartered in Paris, France with subsidiaries across Western Europe and a global network of local partners covering over 90 countries, the company has a proven structure, the skills and experience to capture new consumer healthcare businesses and deliver high quality brands on a global scale. Visit: www.hra-pharma.com for more information.
Astorg is a global private equity firm with over €13 billion of assets under management. We work with entrepreneurs and management teams to acquire market leading global companies headquartered in Europe or the US, providing them with the strategic guidance, governance and capital they need to achieve their growth goals. Astorg enjoys a distinct entrepreneurial culture, a long-term shareholder perspective and a lean decision-making body. Astorg has valuable industry expertise in healthcare, software, technology, business services and technology-based industrial companies. Astorg has offices in London, Paris, New York, Frankfurt, Milan and Luxembourg.
For more information about Astorg: www.astorg.com. Follow Astorg on LinkedIn.
About Goldman Sachs Asset Management Private Equity
Bringing together traditional and alternative investments, Goldman Sachs Asset Management provides clients around the world with a dedicated partnership and focus on long-term performance. As the primary investing area within Goldman Sachs (NYSE: GS), we deliver investment and advisory services for the world’s leading institutions, financial advisors and individuals, drawing from our deeply connected global network and tailored expert insights, across every region and market—overseeing more than $2 trillion in assets under supervision worldwide as of June 30, 2021. Driven by a passion for our clients’ performance, we seek to build long-term relationships based on conviction, sustainable outcomes, and shared success over time. Goldman Sachs Asset Management invests in the full spectrum of alternatives, including private equity, growth equity, private credit, real estate and infrastructure. Established in 1986, the Private Equity business within Goldman Sachs Asset Management has invested over $75 billion since inception. We combine our global network of relationships, our unique insight across markets, industries and regions, and the worldwide resources of Goldman Sachs to build businesses and accelerate value creation across our portfolios.
For more information about Goldman Sachs, please visit: www.goldmansachs.com.
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