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Consumer self-care company Perrigo Company plc has entered into a definitive agreement to sell its infant formula business to US contract manufacturer MeridianMade in a transaction valued at up to $175 million.
The divestiture follows a formal strategic review by Perrigoās board of directors, designed to optimise its operational footprint and redirect capital towards its core over-the-counter consumer self-care portfolio. Under the agreement, consideration comprises $40 million in cash payable at completion, alongside up to $135 million in performance-contingent milestone payments through 2030.
The deal transfers one of North America's leading private-label infant nutrition operations to MeridianMade, safeguarding commercial production capacity for store-brand infant formula across major retail multiples.
"Today's announcement marks an important milestone in advancing the Streamline pillar of our Three-S plan to stabilise, streamline and strengthen the business," said Albert Manzone, interim President and Chief Executive Officer of Perrigo. "This transaction allows us to focus our resources on our core portfolio of over-the-counter products that address everyday health needs, while meaningfully reducing future capital expenditure."
Financial Breakdown
For the four quarters ended 27 June 2026, Perrigo's infant formula division generated net sales of $380 million and segment adjusted operating income of $8 million, reflecting a capital-intensive, lower-margin profile compared with the groupās consumer healthcare divisions.
The financial parameters of the divestiture include:
šµ Consideration Architecture: A baseline $40 million cash payment upon closing, coupled with earnout milestones totalling up to $135 million contingent on commercial volume and operational performance targets through 2030.
š Impairment Recognition: Perrigo expects to record a non-cash pre-tax impairment charge in the range of $275 million to $375 million in the fourth quarter of 2026 in connection with the asset sale.
š Reporting Reclassification: The infant formula business will be accounted for within Perrigo's third-quarter 2026 financial statements before being formally reclassified as discontinued operations starting in the fourth quarter of 2026.
āļø Balance Sheet Impact: Perrigo confirmed the transaction will reduce group capital expenditure requirements, allowing management to redeploy operating free cash flow into higher-margin self-care categories and corporate deleveraging.
Operational Transition and Manufacturing
MeridianMade operates as a specialised contract development and manufacturing organisation (CDMO) in the United States, focusing on nutritional powders and infant food products.
The acquisition provides MeridianMade with scaled infant formula processing assets, blending lines, and packaging capacity:
š¼ Store-Brand Supply Continuity: Secures long-term contract supply agreements for private-label infant formula sold across US supermarket chains, mass merchandisers, and pharmacy banners.
š”ļø Operational Continuity: The companies will operate independently until formal completion. Perrigo will retain operational control and regulatory compliance oversight during the interim period to maintain product safety, testing standards, and uninterrupted retail distribution.
"This acquisition reinforces our commitment to supporting the long-term, resilient supply of store-brand infant formula, which provides American families with an accessible and affordable option for infant nutrition," stated MeridianMade CEO Ron Belldegrun and President Mia Funt in a joint statement.
US Infant Formula Market
The divestiture marks a major realignment in the North American infant nutrition sector, which has faced sustained regulatory oversight and capital pressures following nationwide infant formula supply disruptions in recent years.
Producing infant formula under stringent US Food and Drug Administration (FDA) regulatory frameworks requires extensive capital investment in sterile processing facilities, microbiological testing laboratories, and compliant cleanrooms. By divesting the manufacturing infrastructure to a dedicated contract manufacturer, Perrigo eliminates recurring factory maintenance capital expenditure while ensuring retail grocers retain access to lower-cost store-brand alternatives that compete against premium branded formulas.
The transaction is expected to close in the first half of 2027, subject to customary closing conditions, antitrust review, and required regulatory approvals.
