Perrigo to acquire Omega Pharma for €3.6 billion

Perrigo, the Irish-domiciled consumer pharma group that bought Elan last year, has announced plans to acquire Belgium's Omega Pharma for €3.6 billion.

The transaction, which is expected to close in the first quarter of next year, brings Perrigo’s spending on its expansion in Europe to almost €10 million in just over a year.

The Omega deal will see the US-based company pay €2.48 billion as well as assuming €1.1 billion in debt. A quarter of the price would be paid for with stock, with the balance coming from cash and debt, Perrigo said. It also said the transaction created “multiple opportunities to cross-sell Perrigo products in new channels”.

Perrigo chief executive Joe Papa told The Irish Times: "Were it not for the Elan transaction, I'm not sure we would have had a gateway to do this Omega deal."

Perrigo said the deal would immediately add to adjusted earnings. It expects to deliver savings by bringing currently outsourced Omega production back into Perrigo and Omega facilities. It also anticipates revenue synergies as some of Perrigo’s product portfolio is rolled out across Omega’s distribution channels in 35 countries in Europe and emerging markets.

Mr Papa also said that rest-of-the-world sales would account for around 45-50 per cent of Perrigo business after completion of the deal compared to about 20 per cent before the Elan transaction.

Pensions case

Omega has its headquarters in Nazareth, Belgium and generated sales of more than €1.2 billion in 2013, with more than half made by its top 20 brands.

The company owns a number of over-the-counter cough and cold, skincare, pain relief, weight management and gastrointestinal treatment brands, including Solpadeine, Zantac and TCP.

A number of companies, including Sanofi and Actavis, had also been interested in Omega, according to reports.

Omega’s Irish business was involved in a landmark pensions case in which the High Court found that trustees were entitled to seek more than the statutory minimum from the group when it sought to wind its defined benefit pension plan up in late 2012. Mr Papa said Omega chief executive and founder Marc Coucke was keen to ensure it acted fairly in the issue.

Perrigo bought Irish pharma firm Elan for €6.27 billion last year, citing Ireland’s low-tax environment as a factor in the deal.