Perrigo (NYSE: PRGO)
Perrigo is having an incredibly rough day in the market today, and for good reason. We’re seeing a bit of a surprise CEO shakeup at the company. Today, we’ll talk about the change to the CEO position at the company, how investors are reacting to the news, and what we can expect to see from PRGO moving forward. So, let’s get right to it…
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PRGO CEO Steps Down To Save Another Company
As mentioned above, Perrigo is having a very bad day in the market today as investors show their disappointment with CEO changes that were announced today. The recent CEO at PRGO, Joseph Papa, has made the decision to step down from the company effective immediately. Instead of holding the position of leadership at PRGO, Papa has made the decision to abandon ship and start working for a rival pharmaceutical company.
It was announced today that Joseph Papa will be taking on the role as CEO at Valeant Pharmaceuticals INTL Inc (NYSE: VRX). As a result, Papa will no longer be able to hold his position at Perrigo, as helping to lift the struggling company back above water will likely be a more than full-time job.
This is incredibly bad news for PRGO. After all, recently, there was a takeover bid by Mylan (MYL) to buy the company in a hostile takeover with a value of $26 billion. However, Joseph Papa persuaded shareholders not to take the deal as he had a multi-year turnaround plan. This, in combination with other issues such as further pressure from Johnson & Johnson (JNJ), as well as a possible impairment charge from Omega Pharma, could set PRGO up for some big issues down the road, especially without the multi-year plan Papa was supposed to be carrying out. Ultimately, Papa is leaving Perrigo in a very compromised position.
How The Market Reacted To The News
As investors, we know that the news moves the market. Ultimately, any time there is positive news released with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with that company. Adversely, when negative news is released, we can expect to see declines. In this case, the news that was released with regard to PRGO was overwhelmingly negative news. While the company has already found a replacement for Papa (John Hendrickson), investors were putting quite a bit of faith into Joseph Papa’s leadership to drive Perrigo to the next level. As a result, we’re seeing an overwhelmingly negative reaction to the news in the market today. Currently (11:32), PRGO is trading at $103.54 per share after a loss of $17.80 per share or 14.67% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I would love to say that I’m expecting to see a ton of positivity out of PRGO. However, that simply is not the case. Unfortunately, the timing is absolutely horrible for the loss of a great leader like Joseph Papa. From here, a new CEO will have to take hold of the company, and do it quickly, to allow it to compete with Johnson & Johnson as well as ward off takeover bids. This is likely to lead to further declines on the stock. However, with Papa out of the way, Mylan may come in and offer yet another takeover bid, one that investors may jump on, which could send the stock soaring. Nonetheless, I’m not counting on that possibility. All in all, PRGO seems to be an incredibly risky play at the moment.
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What Do You Think?
Where do you think PRGO is headed and why? Let us know your opinion in the comments below!