Rare Disease Sale (PRGO) – Deleveraging catalyst
Perrigo announced that it reached an agreement to sell its Rare Disease business. It acquired the non-core business when it purchased HRA with revenue of ~$60M. It will receive a total consideration of €275M consisting of an upfront cash payment of €190 and up to €85M in earnout payments. The sale is expected to close during Q3. The upfront cash proceeds will enable the company to get below 4x leverage by the end of the year. Perrigo’s leverage is one of the largest obstacles for potential investors, so the deleveraging milestone should expand the multiple.
Bird flu in the milk supply (STKL) - Possible development
To limit the spread of HPAI H5N1, the USDA now orders all dairy cattle to be tested before moving the animals across state lines. The new federal order comes after a lab detected the virus's genetic material in 38% of the 150 retail samples of milk tested purchased from six states. The testing showed the virus was not live after the pasteurization process. The USDA said it has not found changes to the virus that would make it more transmissible to humans, although cases in some humans in direct contact with the infected animals are possible.
Before the order, the avian virus in livestock was not a reportable disease like it is in poultry. There are no cattle influenza experts since it is not a species that anyone had on the list. Avian influenza in cattle was not a possibility that researchers had previously explored.
The results suggest the outbreak is underreported. The FDA and CDC assure us the risk to human health is low. Could the concern grow enough that some people switch to plant-based milk? That seems more likely than bird flu in cattle seemed to the experts a few months ago.
Wine sales decline (STZ, NAPA) - Status Quo
Wine sales in the off-premise channel decreased by 3% in the four weeks ended March 23. Volumes fell by 6% in the four-week period compared to 5% in the last 52 weeks. Wine sales have been weak, and volumes have been even worse. The weakness in beverage alcohol has extended into 2024.
WHO Youth alcohol & nicotine report – (BUD, PM) - Monitoring Development
The World Health Organization’s (WHO) European branch released a report that said widespread use of alcohol and e-cigarettes among adolescents is “alarming.” The report recommended measures to limit access. The report was based on a survey of young people in Europe, Central Asia, and Canada. The report found that 38% of 15-year-old girls had drunk at least once in the last month, and 36% of boys had. 20% of 15-year-olds had used an e-cigarette in the last month. 12% of 15-year-olds had ever used cannabis, down 4% points from four years ago. Great Britain was found to have the highest rate of child alcohol use worldwide. 35% of boys and 34% of girls had drunk alcohol by the age of 11 in Great Britain, and more than half had by the age of 13 years. The WHO has increasingly become hostile to the alcohol industry, with some public success in Great Britain and Canada.
