PERRIGO Co plc (PRGO) · Oct 29, 2026 · Disposition
$175M divestiture — $40M cash upfront; up to $135M milestone payments
Perrigo’s infant formula divestiture advances its portfolio cleanup, but the deal brings limited upfront cash and a sizable impairment.
Perrigo is in the middle of a multi-year reset: repairing its core consumer self-care operations, simplifying the portfolio, and directing capital away from businesses that do not fit the go-forward model. Its Three-S plan had already identified Infant Formula for strategic review, while management was separately positioning “Core Perrigo” as the cleaner, higher-margin business excluding Infant Formula and other divestitures.
The strategic review has now become a signed exit. Perrigo agreed to sell Infant Formula to MeridianMade for up to $175 million, with $40 million payable at closing and the remainder tied to milestones through 2030. This is meaningful progress on a review the market already knew was underway, so the surprise is the execution and terms—not the direction of travel.
| Figure | Current | Comparison 1 | Comparison 2 |
|---|---|---|---|
| Deal consideration | $175M | $40M cash at close | $135M contingent |
| Infant Formula sales (TTM) (Financial Highlights) | $380M | ||
| Segment adjusted operating income (TTM) (Financial Highlights) | $8M | ||
| Q4 2026 impairment (Financial Highlights) | $275M–$375M |
The business being sold is large in sales but barely profitable on the disclosed measure. Infant Formula generated $380 million of trailing-four-quarter sales but only $8 million of segment adjusted operating income, making the exit economically understandable even though it removes revenue from the consolidated company.
The near-term accounting cost is much larger than the cash proceeds received at closing. Perrigo expects a non-cash impairment charge of $275 million to $375 million in the fourth quarter of 2026, while only $40 million of the purchase price is immediate cash. That does not necessarily change cash flow immediately, but it confirms Perrigo is accepting a substantial write-down to remove the category and avoid future investment.
The main business benefit is simplification and lower future capital needs, not sale proceeds. Perrigo says the divestiture should improve the margin profile, eliminate significant expected future capital expenditures, and make reported results more representative of Core Perrigo. Infant Formula will move into discontinued operations beginning in the fourth quarter of 2026, although the transaction is not expected to close until the first half of 2027. 〔0〕
Bottom line: This is a strategically logical cleanup that advances a previously telegraphed review, but the economics are mixed: limited upfront cash, milestone-heavy consideration, and a large impairment in exchange for a simpler business and lower future capital demands.
Regulatory approvals and closing expected in first half of 2027
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