Perrigo Co. plans to acquire generic drug maker and marketer Paddock Laboratories Inc. for $540 million in cash.

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Perrigo to buy Paddock Laboratories

January 20th, 2011

ALLEGAN, Mich. – Perrigo Co. plans to acquire generic drug maker and marketer Paddock Laboratories Inc. for $540 million in cash.

Perrigo said Thursday that the deal to buy the privately held, Minneapolis-based company will broaden its roster of generic pharmaceuticals and add a strong new-product pipeline. Pending regulatory approval and customary closing conditions, the acquisition is slated to close during Perrigo's 2011 fiscal fourth quarter.

"This acquisition is an important next step forward in executing on our strategy to expand our specialty portfolio of generic Rx products," Perrigo chairman and chief executive officer Joseph Papa said in a statement. "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."

According to Perrigo, the transaction stands to add more than $200 million in annual sales, including more than 35 products and a pipeline of over 25 ANDAs pending approval with the Food and Drug Administration.

"We are very impressed with Paddock's solid foundation and growth over the past 30 years," Papa commented. "Bruce Paddock and his team, led by CEO Michael Graves, have built a company focused on bringing high-quality products quickly to market, backed by state-of-the-art manufacturing. I am confident that this strategic acquisition will help to further grow our existing Rx business and continue to add value for our shareholders."

The company added that it expects to receive a significant tax benefit from the acquisition of Paddock, which is projected to result in cash tax savings to Perrigo of roughly $95 million over the next 15 years.

Perrigo is a leading global health care supplier that develops, manufactures and distributes over-the-counter and generic prescription pharmaceuticals, infant formulas, nutritional products, active pharmaceutical ingredients (APIs), and pharmaceutical and medical diagnostic products. The company said it's the world's largest store-brand manufacturer of OTC pharmaceuticals and infant formulas.