Perrigo Buys Omega Pharma for $3 Billion

Generic drugmaker beat out several rivals to acquire the Belgian healthcare product firm

Adam Bird/Bloomberg

Perrigo, the U.S.-Israeli-Irish maker of generic over-the-counter drugs, said on Thursday it would acquire Belgium’s Omega Pharma for 2.48 billion euros ($3.11 billion) to expand its portfolio of products.

Perrigo said it would also take on 1.1 million euros of debt from closely held Omega.

Omega sells prescription-free medicines, healthcare products and personal care items such as wart treatments and suntan lotions over the counter. Over-the-counter drugs offer lower margins than prescription drugs but demand for them is usually higher because they are cheaper.

“Omega brings a leading OTC product portfolio, European capabilities, and a highly experienced management team to support Perrigo’s continued growth,” Perrigo CEO Joseph Papa said in a statement.

The two companies had combined revenues of $5.7 billion in the last 12 months, thus the acquisition will make Perrigo among the world’s five largest providers of over-the-counter healthcare remedies, Perrigo said.

Perrigo’s shares closed down 3.6% to 585 shekels ($154) in Tel Aviv Stock Exchange trading on Thursday in light trading before the bell. The stock closed at $158.50 on the New York Stock Exchange on Wednesday. 

Reuters reported in July that Omega, which was taken private by CEO Mark Coucke and private equity firm Waterland three years ago, hired Morgan Stanley to look at a potential sale. Companies including Sanofi, Actavis and Boehringer Ingelheim had all eyed Omega, but last week’s report said Perrigo had bested them in the competition and was in exclusive talks to complete the acquisition.

Perrigo said it would place about five million shares, representing 25% of the equity value of the deal, with Coucke and fund the rest through cash and debt. Perrigo had 133.9 million shares outstanding as of September 27.

The company, which was founded in the United States and has listed its shares in Tel Aviv since it took over Israel’s Agis Industries in 2005, said the deal, which was expected to close in the first quarter of 2015, would immediately add to adjusted earnings. Last year it bought Irish drug company Elan C for $8.6 billion and moved its corporate address from Michigan to Ireland.

Perrigo said it had secured a 1.75-billion-euro credit facility from J.P. Morgan and Barclays, who were also its financial advisers for the deal.

Reuters contributed to this report.