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Executive Summary

PERRIGO MANAGEMENT ACQUIRING PRIVATE LABEL MANUFACTURER FROM GROW Group for $55.8 mil. in cash and short-term notes, Grow noted in a March 24 release. In connection with the sale, Grow said, $45.2 mil. of Perrigo's long-term debt will be eliminated from Grow's consolidated balance sheet. The net value of the deal for Grow in cash, notes and debt assumption will surpass $100 mil. Grow, a New York City-based manufacturer of private label household cleaning and industrial maintenance products, acquired L. Perrigo in January 1986 for approximately $45 mil. ("The Pink Sheet," Jan. 13, 1986, T&G-8). Grow financed the deal with long-term debt that it hoped to retire by spinning off 26% of Perrigo via a public offering last fall ("The Pink Sheet" Aug. 24, T&G-7). However, the timing of the offering could not have been less fortuitous. Perrigo management had been scheduled to meet with its underwriters to set a final price for the offering on "Black Monday," Oct. 19, 1987. As a result of the stock market crash, Grow and Perrigo had to cancel the stock offering. With the market for new offerings drying up after the crash, Grow was forced to consider other alternatives due to the continued effect of debt burden on its cash position. In a separate March 24 press release, Perrigo said the management team acquiring the OTC and H&BA private label manufacturer is led by Chairman Bill Swaney and President and CEO Mike Jandernoa, "with the participation and support of the management team." The management team taking Perrigo private again is essentially the same as the group that sold to Grow two years ago, with the exception of a Smith Barney venture capital group and a large shareholder that had supported the merger with Grow. Perrigo said that this time around it will have a "different mix in terms of ownership." The transaction, Perrigo predicted, "will benefit both companies by allowing Grow to reduce a large portion of their debt and giving Perrigo the independence to finance its growth." The deal is scheduled to close on March 31. Perrigo is the leading private label manufacturer of OTC and health and beauty aid products in the U.S. The company supplies private label line items to a number of retailers including Rite Aid, K-Mart, and Safeway, and recently signed a long-term supply agreement with Peoples worth $40 mil. In 1987, Perrigo also announced plans to market its own Equate private label line. Perrigo sales in fiscal 1987 (ended June 30) were $130 mil.

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