The royalty stream that Perrigo Company plc Ordinary Shares (NYSE:PRGO) used to get from Tysabri has been sold to Royalty Pharma. Both companies are based in Ireland and the price paid by Royalty Pharma for the rights was $2.85 billion. The headquarters of Royalty Pharma are in the U.S. despite being domiciled in Ireland.
Consequently, the filing of Perrigo’s annual report will be delayed until March this year. This is to enable the company to undertake a review of its accounting practices, and in particular the revenues that sales of Tysabri used to generate.
In the deal, Royalty Pharma will pay a cash amount of $2.2 billion while the rest will be paid out as milestone payments.
The sale of rights to Tysabri comes after Perrigo settled with Starboard Value, an activist hedge fund. The hedge fund had been calling for Perrigo to dispose of assets in order to unlock shareholder value. This followed a set of disappointing financial results as the company’s generics drugs unit suffered. Some of the problems were also caused by the acquisition of Omega Pharma which did not work out well despite Perrigo forking out $4.5 billion for the acquisition back in 2014.
In the wake of selling the royalty stream, Perrigo has also announced changes in the company. One of these is that Judy Brown, the CFO of the company, would be stepping down and her position will be taken up by a temporary head as the search for a permanent representative begins. Brown will be heading to a rival drug maker where she will be in charge of finance and global business in her capacity as senior VP. This is not the only senior executive Perrigo has lost in the recent past as Joe Papa, the former CEO, left in 2016.
The company also wants to slash the total number of employees by laying off 750 people. Perrigo is also looking into disposing of a unit that concentrates on making ingredients used in the manufacture of drugs.
On Tuesday shares of Perrigo Plc fell sharply by 11.70% to close the day at $74.77.