Perrigo Company Plc (PRGO)

[VanWilder]

PRGO - Reckitt Benckiser Buyout Potential


Pretty quiet here for a company that may get bought anytime....literally any Day. The puzzle pieces are fitting together way too well to be just a coincidence.


Timeline:

Back in 2015 Mylan tried to go hostile for Perrigo at a $180+ price tag, but did not succeed.

June of 2016 - Rumor hits the street of a Mystery UK buyer for PRGO at the $20B level.

July of 2016 - Rumor hits again that the UK buyer is Reckitt Benckiser of the UK, and preparing a $20B offer.

September 11th 2016 - Activist Starboard Value LP takes a 4.6% stake in PRGO, Advocating several actions within the company to Unlock Shareholder value.


Reckitt Benckiser has publicly looked at buying both Merek's Consumer health division, and Pfizer's Consumer division, but both of these are now off the table. Merek's sold to Bayer, and Pfizer is not breaking up the company until at least 2018. The Pfizer news just came out 6-days ago, so until then BR may have been waiting to see if that was a Viable option. Now it is not. There are far Fewer matches for RB now, than were possibly on the Table in 2014-2015. The clock is ticking for RB to make a move, and I think that they may make a bid for Perrigo before the new year.

My guess is RB has been kicking the Tires on Perrgio now for several months (since at least June), and waiting to see where the Dust settled on the Pfizer Breakup. RB was also mentioned as a buyer for Church & Dwight this Mayy, but those Rumors were Denied by Church & Dwight.

The last Rumor in June of this year even stated the financial Firms advising both PRGO and RB. This Seems awfully specific for an unfounded Rumor, and the June Rumor actually supports the RB theory, and the July story as well. Both Reckitt and Perrigo did NOT deny these Rumors.

Last month, a report claimed Perrigo was close to an agreement to be bought by a UK-based company for $US20bn, although it did not name the latter.

The report in StreetInsider.com cited a source as saying Morgan Stanley (NYSE:MS) was advising Perrigo and Barclays PLC (LON:BARC) was among institutions advising the UK company.


Reckitt Benckiser has been on the Acquisition hunt since at least 2014 to expand their Consumer Health division. They have not Purchased anything yet that fulfills that Goal.

RB CEO:
RB’s net debt ratio of 0.7 times adjusted earnings before interest, tax, depreciation and amortization is below that of competitors Unilever at 1.1 and Procter & Gamble Co. at 1.3, meaning the company has financial flexibility to pursue transformational acquisitions. Discussing firepower, Kapoor said that RB is not thinking about limitations on the size of a potential deal.

“If any of the interesting consumer-health assets were to come up today, I believe RB has the capacity to do it. Any of them,” he said.


With PRGO stock trading at $93 from a High of $200, with a shareholder base that is Angry regarding the slump in Stock Value, Perrigo is Ripe for a takeover bid in the $135-$160 range. The Rumor articles state that Perrigo is looking for a minimum of a 100% premium, but I don't believe if RB or another acquirer made their offer Public, it would take that elevated Premium to get it accomplished. With Starboard coming on board in the past 3-weeks, the Board and newer CEO will be under tremendous pressure to get the Share Price UP, and seriously consider any/all Major moves that may be good for the Stock Price.


Option Volume has been slightly unusual 3 days the past week, with Call Volume above normal, and directionally Bullish Action.

I continue to Add the Nov and Jan PRGO call options, along with the PRGO common stock which is Cheap whether the Perrigo Buyout with Reckitt occurs or not.

LONG PRGO !!!!!!!!!


Links:

http://www.fiercepharma.com/pharma/perrigo-up-for-20b-sale-to-mystery-u-k-buyer-report

http://www.proactiveinvestors.com/companies/news/128264/reckitt-benckiser-set-to-bid-for-perrigo-rumours-128264.html

http://www.modernhealthcare.com/article/20160926/NEWS/160929928

http://www.bloomberg.com/news/articles/2015-12-04/reckitt-benckiser-ceo-would-look-at-buying-pfizer-consumer-unit

http://www.fiercepharma.com/m-a/reckitt-benckiser-gives-up-on-merck-otc-deal-leaving-bayer-open-shot


http://www.cnbc.com/2016/05/19/church-dwight-shares-spike-amid-report-of-reckitt-benckiser-takeover-bid.html

http://thefly.com/news.php?symbol=PRGO


http://247wallst.com/healthcare-business/2015/06/01/3-specialty-pharma-stocks-that-could-be-acquired-in-2015/