Perrigo (PRGO) sources under Irish tax bill settlement agreement
Perrigo Company plc PRGO announced that it has reached a settlement agreement with the Irish Office of Tax Commissioners for an Amended Tax Notice (NoA) involving tax payable issued in 2018. The NoA has been issued by the Irish authority for tax debts related to the sale of the Tysabri patents of Elan Pharma, the entity acquired by Perrigo in 2013, for Biogen BIIB in 2013.
Pursuant to the settlement agreement, Perrigo has agreed to pay a total amount of approximately $ 345 million (€ 297 million) as full and final settlement of all debts raised by the Irish authority. The Irish authority has not imposed any interest or penalties on Perrigo and Perrigo will also be granted credit for certain taxes already paid and for certain unused research and development (R&D) credits, as part of the agreement. After applying the credits, Perrigo must pay a total of 266.1 million euros in cash to settle with the Irish authorities.
The original NoA issued in 2018 claimed a tax debt of $ 1.9 billion (1.636 billion euros). Perrigo had appealed to the Irish Ministry of Finance following receipt of the notice. In 2020, the Irish High Court ruled in favor of the Irish Office of Tax Commissioners. The company also challenged the opinion separately and it was assessed by the Irish Tax Appeals Board. After a fierce battle, the company finally managed to settle the case with a much lower amount than originally claimed. The Irish office has also agreed that it will not take any action with respect to the NoA or any other income or transaction related to Tysabri in the future in accordance with the settlement agreement.
Removing that major surplus at a significantly lower cost boosted investor sentiment, and Perrigo’s shares gained more than 14% on after-hours trading on September 29 after the news broke. Perrigo shares are down 2.7% so far this year against an industry increase of 1.4%.
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We expect Perrigo’s strong outlook following its restructuring into a self-care business coupled with the removal of the billion dollar tax liability to likely increase the company’s shares in the future. .
We note that Perrigo initiated the transformation process to move from a healthcare business to a self-care business in 2019. The first key acquisition in this transformation process was that of the world leader in oral self-care products. private label, Ranir Global Holdings. which has dramatically increased the company’s revenue over the past two years. This was followed by several other acquisitions during the period, including some market-leading OTC self-care brands of Sanofi SNY, which further strengthened the company’s portfolio. Earlier this month, Perrigo agreed to acquire Héra SAS, the world leader in consumer self-care based in France, to add a portfolio of high-growth, high-growth over-the-counter self-care brands. on the market.
As part of the transformation process, the company also divested its other product portfolio, which includes the animal health business for PetIQ PETQ in 2019 and the generic Rx Pharmaceuticals business to Altaris Capital Partners in July 2021. The company also plans to divest its Latin America business in the future. These disposals bode well for the company as they bolster Perrigo’s cash flow and continue to focus on strengthening and expanding its personal care business.
Perrigo Company plc Price
Perrigo Company plc Price | Perrigo Company plc quote
Currently, Perrigo wears a Zacks Rank # 3 (Hold). You can see the full list of today’s Zacks # 1 Rank (Strong Buy) stocks here.
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