Watson picks up Perrigo generics as Paddock Labs buy closes; 2nd-qtr 2011 profits fall

US generics drugmaker Perrigo (Nasdaq: PRGO;TASE) say that it has closed its $540 million cash  acquisition of Paddock Laboratories, a Minneapolis-based pharmaceutical manufacturer of generic prescription drugs and over-the-counter specialty products (The Pharma Letter January 21).

As previously highlighted, Perrigo expects to receive a significant tax benefit generated from the acquisition of Paddock's assets. The net present value of the tax benefit is estimated to be $95 million. Inclusive of the tax benefit, the total consideration for the acquisition is around $445 million, said Perrigo.

As a result of the closing of the acquisition, Watson Pharmaceuticals, Inc. (NYSE: WPI) will acquire a portfolio of generic pharmaceutical products from Perrigo that are being divested as a result of the Federal Trade Commission review. The total revenues from marketed products represent less than 0.2% of the combined entities' total fiscal year 2011 revenues, and none of the revenues from the divested pipeline product were included in Perrigo's projections for the next few fiscal years. Terms were not disclosed.