Perrigo Announces Strategic Investment to Expand and Strengthen U.S. Infant Formula Manufacturing
The company buys Nestlé’s Gateway infant formula factory in Eau Claire, Wisconsinas well as US and Canadian rights to Good Start® formula milk brand
Invest immediately in the Gateway plant to add 7 million pounds of capacity needed by the infant formula industry and improve consumer choice
Investment marks first phase of Perrigo’s supply chain reinvention program
DUBLIN, November 1, 2022 /PRNewswire/ — 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 build industry capacity, improve consumer choice and increase access to safe and affordable infant formula for parents and caregivers caregivers. As part of this strategic investment, Perrigo purchased Nestlé’s Gateway infant formula factory in Eau Claire, Wisconsinas well as US and Canadian rights to Good Start® infant formula brand. Also included in the $170 millionPerrigo will invest immediately $60 million to increase Gateway’s 29 million pound-per-year production capacity by 7 million pounds, or more than 100 million additional 8-ounce bottle equivalents per year, within 18 months, adding a total of 36 million capacity pounds at Perrigo. These investments are in addition to the few $20 million Perrigo invests every year to ensure a safe and high quality supply of infant formula from its Vermont and Ohio infant formula facilities.
Prior to the purchase of the Gateway plant, Perrigo did not have sufficient capacity to meet consumer demand for its 17 private label customers who sell infant formula at a discount of around 50% on major national brands. The Company has also been unable to fully meet demand from contract manufacturing customers, including new market entrants and fast-growing high-end national brands. With this newly added capacity, Perrigo can increase supply to these customers and support the Good Start® brand in the United States and Canada improving the utilization and increasing the capacity of the Gateway plant. Along with expanding Gateway’s plant capacity to produce a wider range of formulations, these new investments will help Perrigo increase consumer choices for infant formula in the market.
“Long before this year’s infant formula shortage, we were looking for options to increase capacity to meet the growing demand for our infant formula in the United States,” said Perrigo President and CEO. . Murray Kesler. “But this year’s industry shortage has galvanized our commitment to invest not only to meet demand from our private label and contract customers, but also to help prevent future infant formula shortages.” The purchase and expansion of Gateway is the first major initiative of our recently announced strategy. Supply Chain Reinvention Program. It solidifies our long-term U.S. infant formula manufacturing offering, increases the availability of high-quality, low-cost 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 smooth transition.”
“In making this decision, we have prioritized ensuring that parents and carers have the continuity of a safe, high quality supply of infant formula and providing an ideal home for our people. Perrigo was clearly the right choice,” said Tarun Malkani, CEO of Gerber, a Nestlé company. “This sale allows Gerber to pursue new growth opportunities and focus on what we are known for in the United States, our core baby food business, which includes purees, snacks and cereals.”
Perrigo will operate the Good Start® brand of infant formula in the United States and Canada. Nestlé will continue to honor its existing WIC (Women, Infants and Children) contracts to ensure uninterrupted supply, with Perrigo supplying products through the Gateway factory.
Perrigo expects purchase of infant formula factory Gateway, plus US and Canadian rights to Good Start® infant formula brand, to be immediately accretive to net sales, gross margin and earnings per share. This transaction was financed without additional borrowings and has no impact on Perrigo’s debt reduction plan over the next three years.
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 enabling consumers to proactively prevent or treat conditions that may be self-inflicted. -managed. Visit Perrigo online at www.perrigo.com.
Certain statements in this press release, including statements regarding the expected costs and benefits of investments in infant formula capacity, are “forward-looking statements.” These statements relate to future events or the future financial performance of the Company and involve known and unknown risks, uncertainties and other factors that could cause results, levels of activity, performance or actual achievements of the Company or its industry are materially different from those expressed or implied by forward-looking statements. In some instances, forward-looking statements may be identified by words such as “may”, “will”, “could”, “would”, “should”, “expect”, “anticipate”, “plan”, “anticipates”, “intends”, “believes”, “estimates”, “predicts”, “potential” or the negative form of these terms or any other comparable terminology. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. Although the Company believes these expectations, assumptions, estimates and projections to be reasonable, these 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 pandemic ( COVID-19) and its variants and associated supply chain impacts on the Company’s business; general economic, credit and market conditions; the impact of war on Ukraine and any escalation thereof, including the effects of economic and political sanctions imposed by United States, UK, the European Union and other related countries; the outbreak or escalation of conflict in other regions where we operate; future impairment charges; customer acceptance of new products; competition from other industry players, some of whom have greater marketing resources or greater market share in certain product categories than the Company; pricing pressures from customers and consumers; the potential impacts of ongoing or future governmental investigations and regulatory initiatives; uncertainty regarding the timing and ability of the Company to obtain and maintain certain regulatory approvals, potential costs and reputational impact of product recalls or discontinued sales; the impact of tax reform legislation and/or changes in health 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 of its supply chain reinvention program ‘supply. These and other important factors, including those discussed under “Risk Factors” in the company’s Form 10-K for the year ended December 31, 2021and 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 such forward-looking statements. The forward-looking statements contained in this press release are made only as of the date hereof and, except as 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.
SOURCEPerrigo Company plc