Perrigo cuts 800 jobs
Perrigo has announced a $2 billion share repurchase plan. The plan includes $500 million in repurchases that will be completed by the end of 2015, and an additional $1.5 billion in repurchases that the company expects to complete over the subsequent 24 to 36 months, which are expected to be funded through available liquidity. Perrigo also will reduce its workforce by about 800 employees, or 6% of its current global headcount.
“The actions we are announcing today are the next step in our strategy to leverage the powerful global platform we have built,” said Joseph Papa, chairman and CEO. “The acquisition of Elan in 2013 provided an international gateway for our durable base business model, and the purchase of Omega Pharma earlier this year provided us a pan-European branded consumer healthcare business that is delivering greater benefits than we originally expected. We are taking steps to ensure that we fully capture the benefits of our global platform to drive continued strong profit growth and build substantial shareholder value. With these actions we are making a great company—with an outstanding track record of value creation and compelling prospects for continued growth—even better.
“These actions will amplify the earnings power of our business, with each dollar of revenue driving greater profit accretion and more value for shareholders. We expect to deliver 22% adjusted EPS growth in 2016, even without the full run rate of benefits from our initiatives. Our confidence in the company’s compelling near and longer-term growth prospects—and steadfast commitment to shareholder value—is underscored by the$2 billion repurchase plan we are announcing today.”
The company is taking immediate steps to consolidate its operations, supply chain and procurement management activities into one global center of excellence in Ireland in order to maximize value through the elimination of redundancies and enhancement of purchasing power. Global R&D leadership will join Global Portfolio Management in Ireland to drive a company-wide product selection and development process. Perrigo expects annualized operational and tax benefits of $105 million from those initiatives.
Papa said, “The actions we are announcing today to drive substantial profit growth make the gross inadequacy of Mylan’s [takeover] offer clearer than ever. We strongly believe that Mylan’s claims about synergies, benefits of its expected vertical integration and its ability to manage our business are simply wrong, particularly given the significant differences in our businesses and the markets in which we operate. It is fundamentally irrational to believe that Mylan can run this business better or more profitably than our team. With the well-publicized market pressures on generic and branded pharmaceutical companies like Mylan, it’s not surprising that Mylan would want to add a top five, durable global OTC consumer goods business like ours—but make no mistake, this is a terrible deal for Perrigo shareholders. Perrigo is positioned to create substantially more value than the Mylan offer, and on behalf of the board, I urge all shareholders not to tender.”
Perrigo also announced that John Hendrickson, formerly executive vice president, global operations and supply chain, will be promoted to the position of president, effective immediately, reporting to Papa.