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Perrigo CEO Joseph Papa leaves Perrigo (PRGO) to lead Valeant (VRX) while PRGO issues a warning about missing earnings expectations. Not surprisingly, PRGO stock plummeted today.
Robert Ingram, Chairman of the [Valeant] Board, stated, "The Board has conducted a thorough search process and believes that Joe is the ideal leader for Valeant at this time. He has a strong shareholder orientation, a background in science, and an unmatched track record of accomplishments, highlighted by his ability to lead companies through times of transition and drive excellence across commercial, manufacturing and R&D platforms. In addition, fostering an ethical culture and creating opportunities for professional development have always been high priorities for Joe, and we look forward to Joe's arrival at Valeant" (Valeant names Papa CEO after he resigns from Perrigo).
Reuters reports that Mr. Shareholder Orientation became "well-known on Wall Street last year when Dublin-based Perrigo rebuffed a $26 billion takeover by Mylan NV, the largest-ever hostile bid decided by a shareholder vote." Perrigo's market cap has now dropped to around $14.2 billion — down over 18% today alone — making Papa look foolish for rejecting that buyout offer.
Papa’s departure comes just months after he successfully beat back a $26 billion hostile takeover bid from Mylan [MYL] spearheading a campaign that ultimately persuaded shareholders to reject Mylan’s bid.
Since then, though, Perrigo has reported disappointing quarterly results and slashed its outlook. (Perrigo shares tumble as CEO leaves for Valeant, guidance cut again)
Papa's recent record at PRGO reveals not only bad judgment but also, more disturbing, a lack of ordinary CEO loyalty. As Jim Cramer writes,
Perrigo's (PRGO) heartbreaking. How could Joe Papa, the man who was so intertwined with Perrigo for so long, the man who came on Mad Money and argued there was so much more value to the company than the price Mylan put on it — some 80 points higher than where it went out — just leave for Valeant (VRX)? How could he leave with a huge shortfall and some weird impairment charge about an acquisition that Papa crowed about, Omega, as a way to get international exposure?
There wasn't a single thing that was kosher about what I heard from this company today (Cramer: Papa's Got a Brand New Bag, and Leaves Perrigo Holding the Old One).
Hard to imagine what Papa was thinking when he rejected Mylan's buyout offer, given that PRGO has been cut in half over the past year. The last time the stock traded in the $90s was in 2012.
The Michael Pearson Era Is Officially Over: Valeant Appoints Joseph Papa As Chairman And CEO
Courtesy of ZeroHedge
The Michael Pearson era at Valeant is officially over. Following a week of leaks that the troubled Canadian ex-rollup will hire Perrigo's CEO, Joseph C. Papa, moments ago the company confirmed this when the VRX board said that it has named Joseph C. Papa to become Valeant's Chairman and Chief Executive Officer (incidentally this comes on the day in which Perrigo stock tumbled after the company slashed its 2016 EPS forecast from $9.50-$9.80 to $8.20-$8.50).
The full press release:
Valeant Names Joseph C. Papa To Be Chairman And Chief Executive Officer Of Valeant Pharmaceuticals
Brings More Than Three Decades of Leadership and Operations Experience in Healthcare
Valeant Pharmaceuticals International, Inc. (NYSE: VRX and TSX: VRX) today announced that its Board of Directors has named Joseph C. Papa to become Valeant's Chairman and Chief Executive Officer. Mr. Papa is expected to join Valeant by early May. Mr. Papa will join Valeant from Perrigo Company plc, a leading global healthcare supplier that develops, manufactures and distributes over-the-counter (OTC) and prescription (Rx) pharmaceuticals, where he served as Chairman and Chief Executive Officer. Mr. Papa, who will also join Valeant's Board of Directors, will succeed J. Michael Pearson, who is expected to remain as CEO and a director until Mr. Papa arrives at Valeant.
Mr. Papa, 60, has more than 35 years of experience in the pharmaceutical, healthcare services and specialty pharmaceutical industries, including 20 years of branded prescription drug experience. Mr. Papa has been CEO of Perrigo since 2006 and was appointed as Chairman of the Board of Directors of Perrigo in 2007. During his tenure, he led dramatic and consistent growth across the company, building it into a global leader with net sales of more than $5 billion. Prior to Perrigo, Mr. Papa served from December 2004 to October 2006 as Chairman and Chief Executive Officer of the Pharmaceutical and Technologies Services segment of Cardinal Health, Inc. From 2001 to 2004, he served as President and Chief Operating Officer of Watson Pharmaceuticals, Inc. While at Novartis and Pharmacia /Searle, he was responsible for overseeing the successful launches of Diovan, Celebrex and Lotrel.
Robert Ingram, Chairman of the Board, stated, "The Board has conducted a thorough search process and believes that Joe is the ideal leader for Valeant at this time. He has a strong shareholder orientation, a background in science, and an unmatched track record of accomplishments, highlighted by his ability to lead companies through times of transition and drive excellence across commercial, manufacturing and R&D platforms. In addition, fostering an ethical culture and creating opportunities for professional development have always been high priorities for Joe, and we look forward to Joe's arrival at Valeant."
"I am excited to take on the challenge of leading Valeant and helping the company chart a new course," said Mr. Papa. "Valeant has world-class franchises, important treatments for patients across numerous therapeutic areas and a very talented and dynamic workforce, and I am confident that the company has a bright future ahead. We have an opportunity to move forward with a renewed focus on operating with integrity across all areas of the business and providing customers with safe and affordable products that improve their lives."
Mr. Papa has held management positions at DuPont Pharmaceuticals, Pharmacia Corporation, G.D. Searle & Company and Novartis AG. Mr. Papa serves as a director of Smith & Nephew, a developer of advanced medical devices. He is a graduate of the University of Connecticut with a bachelor's degree in pharmacy and he earned his MBA from Northwestern University's Kellogg Graduate School of Management.
