Perrigo Company plc (PRGO) CEO Murray Kessler on HRA Pharma Acquisition - Conference Call Transcript

Summary of Perrigo Company plc Conference Call on HRA Pharma Acquisition Company Overview - Company: Perrigo Company plc (NYSE: PRGO) - Event: Conference Call regarding the acquisition of HRA Pharma - Date: September 8, 2021 Key Points on the Acquisition - Acquisition Announcement: Perrigo announced a binding offer to acquire HRA Pharma, a leading global consumer self-care company [4][10] - Strategic Importance: The acquisition is seen as a significant step in Perrigo's transformation from a healthcare company to a consumer self-care company, aiming for sustainable growth [6][10] - Financial Impact: The acquisition is projected to add approximately €400 million in net sales by 2023, with expected mid-teen percentage growth [20][21] - Purchase Price: The acquisition is valued at $1.8 billion, approximately$2.1 billion in today's conversion rate, with an enterprise value to expected 2022 adjusted EBITDA of 18 times [21][22] HRA Pharma Overview - Brand Portfolio: HRA's brands are category leaders globally, including Compeed (70% market share in EU), ellaOne (50% market share in EU), and Mederma [12][15][16] - Growth Potential: HRA is expected to drive Perrigo's growth beyond CPG averages, with significant potential for expansion into adjacent categories and geographies [12][14] - Operating Margins: HRA's operating margins are projected to approach 30%, contributing positively to Perrigo's overall financial profile [21] Financial Projections and Synergies - Cost Synergies: Expected operating synergies of over $30 million by 2023, primarily through leveraging Perrigo's existing sales force and distribution capabilities [19][43] - **EPS Impact**: The acquisition is expected to be immediately accretive, adding around$1 to adjusted EPS in the first full year [21][28] - Leverage: Post-acquisition leverage is expected to be around four times EBITDA in 2022, decreasing to below three by 2024 [39] Strategic Vision and Future Outlook - Transformation Journey: Perrigo has undergone significant transformation since May 2019, focusing on divesting non-core businesses and enhancing its consumer self-care portfolio [6][24] - Market Positioning: The acquisition positions Perrigo as a major player in Europe, enhancing credibility and revenue synergies [18][29] - Long-term Growth: The company aims for double-digit revenue growth and improved margins, with a focus on continuous improvement and reducing uncertainty [29][28] Additional Insights - Management Team: The existing HRA management team will remain post-acquisition, ensuring continuity and expertise [17] - Regulatory Approvals: The acquisition is subject to regulatory approvals, expected to be completed in the first half of 2022 [22] - Market Dynamics: The acquisition is seen as a strategic move to capitalize on self-care trends and enhance Perrigo's growth trajectory [10][11] This summary encapsulates the key points discussed during the conference call regarding Perrigo's acquisition of HRA Pharma, highlighting the strategic importance, financial implications, and future growth potential of the deal.