Company Purchases Nestlé's Gateway Infant Formula Plant in
Eau Claire, Wisconsin, along with
U.S. and Canadian rights to the Good Start® Infant
Formula Brand
Will Immediately Invest in Gateway Plant to Add 7 Million
Pounds of Needed Capacity to the Infant Formula Industry and
Enhance Consumer Choice
Investment Marks First Phase of Perrigo's Supply Chain
Reinvention Program
DUBLIN, Nov. 1, 2022
/CNW/ -- Perrigo Company plc (NYSE: PRGO) ("Perrigo" or "the
Company") today announced a $170
million strategic investment to expand and strengthen its
U.S. infant formula manufacturing, which is expected to bolster
industry capacity, enhance consumer choice and increase access to
safe, affordable infant formula for parents and caregivers. As part
of this strategic investment, Perrigo has purchased Nestlé's
Gateway infant formula plant in Eau
Claire, Wisconsin, along with the U.S. and Canadian rights
to the Good Start® infant formula brand. Also included
in the $170 million, Perrigo will
immediately invest $60 million to
expand Gateway's 29 million pound per year production capacity by 7
million pounds, or more than 100 million more 8-ounce bottle
equivalents per year, within 18 months, adding a total of 36
million pounds of capacity to Perrigo. These investments are in
addition to the approximately $20
million Perrigo invests each year to ensure a safe,
high-quality supply of infant formula from its Vermont and Ohio infant formula facilities.
Prior to the Gateway plant purchase, Perrigo had insufficient
capacity to meet consumer demand for its 17 store brand customers
that sell infant formula at approximately a 50% discount to te
major national brands. The Company was also unable to fully meet
demand for contract manufacturing customers, including new market
entrants and rapidly growing premium national brands. With this
newly added capacity, Perrigo can increase supply to these
customers as well as support the Good Start® brand in
the U.S. and Canada by improving
utilization and expanding capacity of the Gateway plant. Along with
expanding the Gateway plant's capabilities to produce a wider range
of formulations, these new investments will help Perrigo increase
consumer choices for infant formula in the marketplace.
"Long before this year's infant formula shortage, we had been
pursuing options to increase capacity to meet growing demand for
our infant formula in the U.S.", said Perrigo President and CEO
Murray Kessler. "But this year's
industry shortage galvanized our commitment to not only invest to
meet the demand for our store brand and contract customers, but
also to help prevent future infant formula shortages. The purchase
and expansion of Gateway is the first major initiative in our
recently announced Supply Chain Reinvention program. It solidifies
our long-term manufacturing supply of infant formula in the U.S.,
increases the availability of lower priced, high-quality infant
formula to consumers, and delivers value to Perrigo
shareholders."
Kessler added, "We are delighted to welcome the Wisconsin plant and Good Start®
brand teams to the Perrigo family and look forward to working with
the world-class Nestlé organization on a seamless transition."
"In making this decision, we prioritized ensuring parents and
caregivers have continuity of a safe, high-quality supply of infant
formula and providing a great home for our people. Perrigo was
clearly the right choice," said Tarun
Malkani, CEO of Gerber, a Nestlé company. "This sale enables
Gerber to pursue new growth opportunities and focus on what we are
known for in the U.S. -- our core baby food business, which
includes purees, snacks and cereals."
Perrigo will operate the Good Start® infant formula
brand in the U.S. and Canada.
Nestlé will continue to fulfil its existing Women Infants and
Children (WIC) contracts to ensure that there is uninterrupted
supply, with Perrigo supplying product through the Gateway
plant.
Perrigo expects the purchase of the Gateway infant formula
plant, along with the U.S. and Canadian rights to the Good
Start® infant formula brand, to be immediately accretive
to net sales, gross margin and earnings per share. This transaction
was funded without additional borrowings and does not impact
Perrigo's plan to reduce debt over the next three years.
About Perrigo
Perrigo Company plc (NYSE: PRGO) is a leading provider of
Consumer Self-Care Products and over-the-counter (OTC) health and
wellness solutions that enhance individual well-being by empowering
consumers to proactively prevent or treat conditions that can be
self-managed. Visit Perrigo online at www.perrigo.com.
Forward-Looking Statements
Certain statements in this press release, including statements
regarding expected costs and benefits of investments in infant
formula capacity, are "forward-looking statements." These
statements relate to future events or the Company's future
financial performance and involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
levels of activity, performance or achievements of the Company or
its industry to be materially different from those expressed or
implied by any forward-looking statements. In some cases,
forward-looking statements can be identified by terminology such as
"may," "will," "could," "would," "should," "expect," "forecast,"
"plan," "anticipate," "intend," "believe," "estimate," "predict,"
"potential" or the negative of those terms or other comparable
terminology. The Company has based these forward-looking statements
on its current expectations, assumptions, estimates and
projections. While the Company believes these expectations,
assumptions, estimates and projections are reasonable, such
forward-looking statements involve known and unknown risks and
uncertainties, many of which are beyond the Company's control,
including: the effect of the coronavirus (COVID-19) pandemic and
its variants and associated supply chain impacts on the Company's
business; general economic, credit, and market conditions; the
impact of the war in Ukraine and
any escalation thereof, including the effects of economic and
political sanctions imposed by the United
States, United Kingdom,
European Union, and other countries related thereto; the outbreak
or escalation of conflict in other regions where we do business;
future impairment charges; customer acceptance of new products;
competition from other industry participants, some of whom have
greater marketing resources or larger market shares in certain
product categories than the Company does; pricing pressures from
customers and consumers; potential impacts of ongoing or future
government investigations and regulatory initiatives; uncertainty
regarding the timing of, and the Company's ability to obtain and
maintain, certain regulatory approvals, potential costs and
reputational impact of product recalls or sales halts; the impact
of tax reform legislation and/or changes in healthcare policy;
fluctuations in currency exchange rates and interest rates; the
Company's ability to execute and achieve the desired benefits of
announced cost-reduction efforts and other strategic initiatives
and investments, including the Company's ability to achieve the
expected benefits from its supply chain reinvention program. These
and other important factors, including those discussed under "Risk
Factors" in the Company's Form 10-K for the year ended December 31, 2021, and Form 10-Q for the quarter
ended July 2, 2022, as well as the
Company's subsequent filings with the United States Securities and
Exchange Commission, may cause actual results, performance or
achievements to differ materially from those expressed or implied
by these forward-looking statements. The forward-looking statements
in this press release are made only as of the date hereof, and
unless otherwise required by applicable securities laws, the
Company disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events, or otherwise.
View original
content:https://www.prnewswire.com/news-releases/perrigo-announces-strategic-investment-to-expand-and-strengthen-us-manufacturing-of-infant-formula-301665367.html
SOURCE Perrigo Company plc