Perrigo exits infant-formula with sale to MeridianMade
Perrigo (PRGO) is selling its infant-formula business to MeridianMade for $175m, including a $40m cash payment and $135m performance-related. Perrigo aims to focus on consumer self-care products, expecting improved margins and reduced capital expenditures. The deal is subject to regulatory approval and expected to close in H1 2024. Infant formula generated $380m in sales and $8m in adjusted operating income for Perrigo in the past year.
How this was made
The 30-second read
Why it matters
The transaction repositions Perrigo toward a more focused OTC self-care portfolio and introduces a sizable Q4 impairment, while MeridianMade gains manufacturing scale and a long-dated revenue component tied to performance payments.
Market read
Traders will likely focus on PRGO’s discontinued-operations classification for infant formula, the magnitude/timing of the Q4 impairment, and the expected 1H next-year close subject to regulation.
What to watch
Performance-linked consideration through 2030 may be contingent on outcomes not detailed here, and regulatory approval timing could delay deal economics and operational transition.
Background
Perrigo is exiting infant formula after a strategic review, while Abbott is spinning off its infant formula and nutrition business and Reckitt is divesting baby food powders and the Mead Johnson brand.
Ticker impact
Perrigo agreed to sell its infant-formula business to MeridianMade for $175m, with regulatory approvals targeted for completion in 1H next year.
Likely positive bias as investors price in capital-light focus on OTC self-care, partially offset by the disclosed fourth-quarter impairment.
The article discloses deal consideration ($40m cash plus $135m performance through 2030), expected completion window, and a $275m to $375m non-cash impairment in Q4, which directly affects investor expectations.
Market effects
Signals continued consolidation and exit from infant formula manufacturing by major consumer-health players, potentially shifting supply and competitive dynamics toward contract manufacturers.
US and Canada infant formula supply chain may become more concentrated around MeridianMade’s US factories in Pennsylvania, Iowa, and Oregon.
Could reinforce broader industry restructuring trends as Abbott and Reckitt also divest infant nutrition assets.
Counterpoint
The disclosed $275m to $375m non-cash impairment could dominate near-term sentiment, making the strategic rationale less supportive for PRGO until investors see stabilization in discontinued-ops reporting.
Key entities
- companyPerrigo
Dublin-based consumer self-care company selling its infant-formula assets to MeridianMade for $175m.
- companyMeridianMade
US contract manufacturer acquiring Perrigo’s infant-formula business, with three US factories cited.
- executiveAlbert Manzone
Perrigo interim president and CEO commenting on the divestiture rationale and expected margin/capex effects.
- executiveRon Belldegrun
MeridianMade CEO commenting on stewardship of store-brand infant formulas.
