Perrigo Buys GlaxoSmithKline, Novartis Consumer Medicines

NEW YORK (The Deal) -- Ireland's Perrigo (PRGO) said Tuesday it is buying over-the-counter medicines  from a recently formed joint venture between the U.K.'s GlaxoSmithKline  (GSK) and Novartis AG  (NVS) of Switzerland. The products have combined sales of $110 million.

European Commission regulators in January made their approval of the creation of GlaxoSmithKline Consumer Healthcare conditional on the venture's sale of 10 products in certain European and Turkish markets including the NiQuitin aid for quitting smoking, cold and flu products, nasal sprays and drops and the Panodil painkiller from the GlaxoSmithKline portfolio; and Novartis cold sore treatments including the Fenivir and Pencifir brands.

The deal with Perrigo meets the joint venture's disposal obligations, a GlaxoSmithKline spokeswoman said. Perrigo is also buying Novartis' legacy Australian Nicotinell nicotine replacement therapy, and purchasing GlaxoSmithKline's NiQuitin in all global markets bar Australia and the U.S., going beyond the EC divestment order for that brand to be shed in the European Economic Area and Turkey.

Perrigo, which is the target of a hostile $30 billion bid by Mylan (MYL), said the brands it is acquiring would have lifted revenue at its branded consumer health care operation by 8% in 2014 and improved margins. It said the deal will boost 2015 earnings per share immediately

Perrigo Chairman, President and CEOJoseph C. Papa said the purchase builds on the platform it established with its $4.5 billion purchase of Omega Pharma last year.

"We are committed to making investments in these brands to grow their market positions in key geographies, by following Omega Pharma's proven approach to brand building," he said in statement.

The creation of GlaxoSmithKline Consumer Healthcare closed in March, along with two related deals between GlaxoSmithKline and Novartis: the sale by GlaxoSmithKline of its oncology business to the Swiss company for up to $16 billion, and GlaxoSmithKline's purchase of most of Novartis' vaccines business for an initial $5.25 billion.

The sale of the OTC brands to Perrigo needs clearance from the EC, the Australian Competition and Consumer Commission, and Brazil's Council for Economic Defense. It is expected to close in the third quarter.

GlaxoSmithKline wouldn't disclose its advisers. Perrigo takes legal advice from Sullivan & Cromwell LLP.

David Marcus contributed to this report.

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