This story was updated at 8:50 a.m. EDT.

Valeant Pharmaceuticals International said Monday it has named Joseph Papa, formerly chief executive of rival drugmaker Perrigo Co. Plc, as its next chairman and CEO. He is expected to join Valeant by early May.

Earlier, Perrigo had indicated it would not fight Papa's joining rival Valeant and said it will replace him with President John Hendrickson.

The move is a boon for Valeant, which is in need of a turnaround after controversy about its relationship with a specialty pharmacy and doubts over its acquisitive business model have driven its shares down 86 percent since August.

The change in Perrigo's leadership comes just months after the Dublin-based generic drugmaker rebuffed a $26 billion takeover by Mylan NV, in the largest-ever hostile bid decided by a shareholder vote.

Perrigo's board agreed on Monday to waive a noncompete restriction in Papa's employment contract that would have stopped him from joining Valeant, the sources said, requesting anonymity because there has not yet been any official announcement.

Hendrickson, who has been with Perrigo for 27 years and previously led several of its operations, including its U.S. consumer healthcare business, will become CEO effective immediately, the company sources added.

Perrigo's board also decided to separate the roles of CEO and chairman, the sources said. It named one of its directors, Laurie Brlas, as its new chairwoman.

Laval, Quebec-based Valeant grew quickly under current CEO Michael Pearson as it embarked on an acquisition spree, snapping up other pharmaceutical players and in many cases sharply raising prices of their drugs.

But the company lost favor with investors last year as its strategy came under scrutiny from regulators, the public and politicians. Pearson returned to Valeant at the end of February, after two months of medical leave while he was being treated for pneumonia, and agreed in March to step down as soon as his replacement was appointed.

Papa joined Perrigo in 2006 and was previously president and chief operating officer of Watson Pharmaceuticals Inc. Perrigo is scheduled to hold its annual general meeting of shareholders on Tuesday.

Reuters reported earlier this month that Valeant had brought in investment banks to review its options amid interest from buyout firms and other companies in a number of its businesses.

In February, Perrigo reported earnings that missed market estimates for the first time in five quarters, as sales in its branded consumer healthcare business disappointed.

The company had bought Belgium's Omega Pharma NV for $3.1 billion last year to expand its over-the-counter products portfolio. It also bought over-the-counter brands from GlaxoSmithKline Plc last year.

Data from Reuters were used to report this story.