Perrigo Securities Lawsuit Adds to Mounting Legal and Financial Risks

What happened

Levi & Korsinsky has filed a class action securities lawsuit against Perrigo Company plc, alleging fraud from February 27, 2023 to November 4, 2025. This legal threat compounds existing risks highlighted in the DeepValue report, such as the unresolved €1.64 billion Irish tax dispute and high leverage with net debt/EBITDA at ~7x. The alleged period coincides with Perrigo's restructuring under cost-saving initiatives like Project Energize, which are critical for margin improvement amid operational headwinds. Investor sentiment, already weakened by a 52% stock decline over the past year, now faces additional pressure from potential litigation costs and management distraction. While Perrigo trades at distressed multiples with a DCF value suggesting upside, this lawsuit underscores the precarious balance between recovery potential and escalating overhangs.

Implication

This securities lawsuit may lead to significant monetary settlements or judgments, straining Perrigo's already stretched balance sheet and hindering deleveraging progress. It risks diverting management focus from executing essential cost-saving programs like Project Energize, which are vital for achieving margin targets. Investor confidence, already fragile due to high leverage and unresolved tax issues, could further erode, increasing stock volatility and capital outflows. The legal process might also complicate the resolution of other legacy risks, such as the Irish tax case, adding layers of uncertainty. Ultimately, this development heightens execution risk and could undermine the equity re-rating potential that underpins the 'POTENTIAL BUY' thesis.

Thesis delta

The securities lawsuit represents a significant new downside risk that was not fully accounted for in the previous analysis. It shifts the investment thesis towards a more cautious stance, as the added legal overhang increases the probability of adverse outcomes that could outweigh operational improvements. Investors should now weigh the potential for litigation-driven setbacks against the distressed valuation and cost-savings trajectory.