Perrigo (PRGO) Buys Patheon's Mexican Business for $34M - Analyst Blog

Perrigo CompanyPRGO announced that it has acquired the Mexican business of Patheon. The deal is valued at approximately $34 million. The acquisition is expected to be immediately accretive to Perrigo's calendar 2015 adjusted earnings after the exclusion of estimates for intangible amortization and transaction-related costs.

The acquisition will not only strengthen Perrigo's supply chain capabilities with the addition of softgel manufacturing technology but will also broaden the company's presence, product portfolio and customer network in Mexico. The deal will further boost Perrigo's store brand leadership position in Mexico.

We note that Perrigo has been aggressively pursuing acquisitions to expand its business and drive growth. Earlier this year, it acquired Omega Pharma, a leading over-the-counter health care company in Europe. Perrigo expects the transaction to be immediately accretive and 10-20 cents per share accretive to fiscal 2016 adjusted earnings after adjusting for amortization, transaction and financing costs.

We note that Mylan MYL has raised its offer to acquire Perrigo. As per the terms of the latest offer, Perrigo shareholders would receive $232.23 per share in a combination of cash and stock. Meanwhile, Teva Pharmaceutical Industries Ltd. TEVA is looking to acquire Mylan.

We are impressed by Perrigo's growth-by-acquisition strategy. We believe that near-term investor focus will be on the three-way takeover battle between Perrigo, Mylan and Teva.

Perrigo holds a Zacks Rank #3 (Hold). Gilead Sciences Inc. GILD is a better-ranked stock in the health care space carrying a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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