Perrigo to acquire assets of Paddock Labs for $540 million

Michigan, USA-based Perrigo (Nasdaq: PRGO) says it has signed a definitive agreement to acquire substantially all of the assets of Paddock Laboratories, a privately-held, Minneapolis-based manufacturer and marketer of generic pharmaceutical products for around $540 million in cash.

Perrigo expects to receive a significant tax benefit as a result of the acquisition of Paddock's assets. The net present value of this tax benefit is estimated to be $95 million. The acquisition is expected to close during the company's fiscal 2011 fourth quarter pending regulatory approval. Perrigo intends to fund the transaction using approximately $80 million of cash on hand, $310 million available per the terms of its existing bank debt agreements and $150 million from a new term loan pursuant to a commitment from Morgan Stanley, JPMorgan and Bank of America.

Perrigo chairman and chief executive Joseph Papa stated: "This acquisition is an important next step forward in executing on our strategy to expand our specialty portfolio of generic Rx products. It adds incremental scale, as well as excellent development and manufacturing capabilities across a spectrum of niche dosage forms. It solidifies Perrigo's leading position in the extended topical space and strengthens our ability to offer new products into the market. And, importantly, Paddock has a proven record for quality manufacturing with great customer service."