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Perrigo Explains Delay In Acquisition of Paddock Labs

New questions from the Federal Trade Commission are delaying the acquisition of Minneapolis-based Paddock Laboratories Inc. by Allegan-based Perrigo Co. (Nasdaq: PRGO), the world's largest store brand manufacturer of OTC pharmaceutical products and infant formulas.

Paddock, like Perrigo, is a manufacturer of generic prescription pharmaceuticals and over-the-counter specialty products.

Said Perrigo chairman and CEO Joseph C. Papa in a statement: "We have recently received a few additional questions from the Federal Trade Commission staff and the parties are working collaboratively with the staff to answer these questions so that the FTC may conclude its review."

The delay pushed about 35 cents per share of acquisition costs into Perrigo's 2012 fiscal year, which started Sunday, June 26. CEO Papa said that would make the acquisition about 10 cents a share dilutive to fiscal year 2012 earnings, since Paddock is expected to add about 25 cents a share to earnings from its profitability during the fiscal year.

"This acquisition is an important step forward in executing Perrigo's strategy to expand our specialty portfolio of generic prescription products," Papa said. "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. Paddock has a proven record for quality manufacturing with great customer service."

As previously highlighted, Perrigo expects to receive a significant tax benefit generated from the acquisition of Paddock's assets. The net present value of the tax benefit is estimated to be $95 million. Inclusive of the tax benefit, the total consideration for the acquisition is approximately $445 million.

Perrigo develops, manufactures and distributes OTC and generic prescription pharmaceuticals, infant formulas, nutritional products, active pharmaceutical ingredients and pharmaceutical and medical diagnostic products. The company's primary markets and locations of manufacturing and logistics operations are the United States, Israel, Mexico, the United Kingdom and Australia.

More at www.perrigo.com.

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