Perrigo Company To Acquire Assets Of Sergeant's Pet Care Products, Inc., For $285 Million

ALLEGAN, Mich., Sept. 13, 2012 /PRNewswire/ -- Perrigo Company (Nasdaq: PRGO; TASE) today announced that it has signed a definitive agreement to acquire substantially all of the assets of Sergeant's Pet Care Products, Inc. (Sergeant's), a privately-held, Omaha, Nebraska-based manufacturer of OTC companion animal healthcare products, for approximately $285 million in cash. Perrigo expects to receive a significant tax benefit as a result of the acquisition of Sergeant's assets. The net present value of this tax benefit is estimated to be approximately $50 million. The acquisition is expected to close during the Company's fiscal 2013 second quarter pending the satisfaction of closing conditions, including regulatory approvals.

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Perrigo Chairman and CEO Joseph C. Papa stated, "This acquisition allows us to penetrate the pet care category by offering numerous flea and tick, health and well-being and consumable products to pet owners at affordable prices. Sergeant's has a proven record of innovation, high quality manufacturing with great customer service. We welcome Sergeant's two hundred-plus employees and over one thousand SKU's to the Perrigo family. This is a first step in executing on our strategy to expand our Consumer Healthcare portfolio into pet care, an adjacency of interest to our retail customers. We are excited to bring quality and value to consumers and their extended families."

Key benefits of the transaction:

• Quality, Affordable Healthcare with High Barriers-to-Entry: Sergeant's primary OTC channel flea and tick products contain the same active ingredients as the leading veterinary channel national brands, but offer consumers and retailers a compelling value proposition. In addition to regulatory hurdles (e.g., Environmental Protection Agency, Food and Drug Administration compliance), intellectual property portfolios, active-ingredient sourcing and channel access create barriers-to-entry.
• Immediate Access to Adjacent Category: The transaction is aligned with the Company's strategic growth objective to expand into adjacent categories where Perrigo can drive enhanced product offerings and value for its retail customers.
• Entry into Sizeable and Growing Self-pay Market: Pet Care is an $8 billion industry that has shown consistent growth through economic cycles. Consumers are treating their pets like members of the family and are spending a higher proportion of discretionary income on pet care and well-being.
• Revenue Synergies: Sergeant's acquisition allows Perrigo to add products to its current offerings and leverage established distribution infrastructure and customer relationships.
• Compelling Value Consistent with Stated Acquisition Criteria: The transaction is expected to be immediately accretive to adjusted earnings per share. The transaction is expected to be approximately $0.12 accretive to GAAP earnings per share and, excluding $0.08 of estimated deal-related expenses and intangible amortization, $0.20 accretive to adjusted earnings per share in the first full fiscal year post-closing. Perrigo's stated goal of Return on Invested Capital accretion is expected to be achieved in fiscal 2014.

Transaction terms

Pursuant to the terms of the agreement, Perrigo will acquire substantially all of the assets of Sergeant's for $285 million in cash on a debt free basis. Perrigo intends to fund the transaction using cash on hand. 

Perrigo expects to receive a significant tax benefit generated from the amortization of the step-up in tax basis resulting from the acquisition of Sergeant's assets. This increase in basis is expected to result in cash tax savings to Perrigo over the next 15 years. The estimated net present value of these savings is approximately $50 million. 

Mr. Papa concluded, "We are very impressed with Sergeant's strategic direction, growth and product offerings since its founding in 1868. The team has built a company focused on bringing high quality, affordable pet care products quickly to market and the barriers to entry in this category are high. This strategic acquisition will expand our existing Consumer Healthcare business and add tremendous value for our shareholders for years to come."

Conference Call Information

Perrigo will host a conference call for investors and analysts at 9:30 a.m. (EDT) on Thursday, September 13. The conference call will be available live via webcast to interested parties on the Perrigo website http://www.perrigo.com or by phone 877-248-9413, International 973-582-2737 and reference ID# 30525127. A taped replay of the call will be available beginning at approximately 2:00 p.m. (EDT) Thursday, September 13, until midnight Thursday, September 20, 2012. To listen to the replay, call 800-642-1687, International 706-645-9291, access code 30525127. 

Advisors

Perrigo's financial advisor is Jefferies & Company, Inc., and its legal advisor is Morgan, Lewis & Bockius LLP.

From its beginnings as a packager of generic home remedies in 1887, Allegan, Michigan-based Perrigo Company has grown to become a leading global provider of quality, affordable healthcare products. Perrigo develops, manufactures and distributes over-the-counter (OTC) and generic prescription (Rx) pharmaceuticals, infant formulas, nutritional products, dietary supplements and active pharmaceutical ingredients (API). The Company is the world's largest manufacturer of OTC pharmaceutical products for the store brand market. The Company's primary markets and locations of logistics operations have evolved over the years to include the United States, Israel, Mexico, the United Kingdom, India, China and Australia. Visit Perrigo on the Internet (http://www.perrigo.com).

Note: Certain statements in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential" or other comparable terminology. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections.  While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control. These and other important factors, including those discussed under "Risk Factors" in the Company's Form 10-K for the year ended June 30, 2012, as well as the Company's subsequent filings with the Securities and Exchange Commission, may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements in this press release are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE Perrigo Company