Perrigo expands further into pet care with Velcera deal

Fri Feb 1, 2013 12:35pm EST

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(Reuters) - Generic drugmaker Perrigo Co PRGO.O has bought privately held Velcera Inc for $160 million, its second acquisition in the animal healthcare market in four months as it seeks to bring its successful store-brand over-the-counter model to pet care.

Shares of Perrigo, the world's largest manufacturer of over-the-counter drugs for the private label market, rose as much as 7 percent in morning trading on the Nasdaq.

The company, which entered the animal healthcare market in September when it bought privately held Sergeant's Pet Care Products Inc for $285 million, said the Velcera deal would add to adjusted earnings in fiscal 2014 ending June 25.

"I think there is not a lot of competition and it is a very large market opportunity," said Guggenheim Securities analyst Louise Chen, noting that most pet medicines are now bought through veterinarians.

Announcement of the deal comes close on the heels of the public offering of Pfizer Inc's (PFE.N) animal health subsidiary Zoetis, which raised $2.2 billion on Thursday.

But Zoetis and Perrigo, with a market value of $9.4 billion, are not likely to cross paths soon. "Zoetis really deals with branded products and 66 percent of Zoetis sales are really livestock, which is different than Perrigo," Chen said.

Allegan, Michigan-based Perrigo said its net income rose 6 percent to $105.9 million, or $1.12 per share, in the second quarter on a 5 percent rise in revenue to $882.9 million. Excluding items, earnings were $1.36 per share.

Analysts expected earnings of $1.31 per share on revenue of $880.8 million, according to Thomson Reuters I/B/E/S.

Sales in Perrigo's consumer healthcare business, which contributes more than 60 percent of total sales, rose 14 percent to $539 million.

Perrigo's shares were up 6.3 percent at $106.79 in early afternoon trading.

(Reporting by Pallavi Ail in Bangalore, Editing by Saumyadeb Chakrabarty and Don Sebastian)

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