Mylan has entered into a definitive agreement with Abbott whereby Mylan will acquire Abbott's non-U.S. developed markets specialty and branded generics business in an all-stock transaction.
Upon closing, Abbott will receive 105 million shares of the combined company worth approximately $5.3 billion based on Mylan's closing price of $50.20 on Friday, July 11, 2014, representing an approximately 21% ownership stake.
"We have been actively looking at a wide range of opportunities, and the acquisition of this business is absolutely the right next strategic transaction for Mylan as it builds on our strong momentum, expands and further diversifies our business in our largest markets outside of the U.S., and clearly positions Mylan for the next phase of growth through enhanced financial flexibility and a more competitive global tax structure," stated Robert Coury, Mylan executive chairman. "In addition to maximizing our growth drivers, the transaction is expected to be immediately and significantly accretive, and to create significant additional cash financial flexibility at close, which we fully intend to put to use to fund future opportunities in this continually consolidating sector. The numerous strategic and financial benefits of this transaction will allow Mylan to potentially accelerate achievement of our long-term financial targets to the benefit of our shareholders."
The specialty and generics portfolio include more than 100 products in five major therapeutic areas (cardio/metabolic, gastrointestinal, anti-infective/respiratory, CNS/pain and women's and men's health) and include several patent protected, novel and/or hard-to-manufacture products with continued growth potential. With a strong presence in Europe, Japan, Canada, Australia and New Zealand, the portfolio is expected to provide approximately $1.9 billion in annual additional revenues at deal close. The business includes an active sales organization of approximately 2,000 representatives in more than 40 non-U.S. markets, as well as two high-quality manufacturing facilities.
"The assets also have an impressive commercial infrastructure and capabilities, which provide us with reach in the physician and patient channels in the acquired markets, complementing our reach in pharmacies," said Healther Bresch, Mylan CEO. "This enhanced commercial platform will help us drive the continued expansion of EpiPen Auto-Injector globally and enable us to more effectively launch important growth drivers, such as respiratory and biologics. We believe Mylan is uniquely positioned to realize improved financial performance and profitability from these assets by leveraging our integrated, efficient operating platform, more effectively distributing the portfolio across channels, and maintaining a greater strategic focus on key products."
This transaction further diversifies Mylan's business outside of the United States by adding a differentiated portfolio of durable specialty and branded generic products and providing entry into the over-the-counter market. Key products include Creon, Influvac, Brufen, Amitiza and Androgel.
The addition of the Assets also enhances Mylan's geographic reach and provides Mylan with enhanced scale and critical mass in Mylan's largest markets outside of the United States. The transaction is expected to approximately double Mylan's revenues in Europe by strengthening its presence in Italy, the United Kingdom, Germany, France, Spain and Portugal. It also is expected to more than double Mylan's revenues in Canada and Japan, and build on Mylan's business in Australia and New Zealand. The transaction also provides Mylan with a meaningful presence in the specialty and branded generics market in Central and Eastern Europe.
The combination significantly expands Mylan's commercial platform and capabilities. The business's strong salesforce in key developed markets enhances Mylan's reach with physicians and patients and complements Mylan's existing strength in pharmacies. This platform provides Mylan with the enhanced infrastructure and expertise to more effectively execute on growth drivers that require access to the physician channel, such as the global expansion of EpiPen Auto-Injector and the launch of biologics and respiratory products, including generic Seretide and generic Advair.
Abbott will carve out the Assets and transfer them to a new public company ("New Mylan") organized in the Netherlands. Immediately following the transfer, Mylan will merge with a wholly owned subsidiary of New Mylan, and New Mylan will become the parent company of Mylan. The new public company will be called Mylan N.V. and will be led by the current Mylan leadership team and headquartered in Pittsburgh.
Under the terms of the transaction agreement, Abbott will receive 105 million shares of New Mylan upon closing, resulting in Mylan shareholders owning approximately 79% of New Mylan and Abbott indirectly owning approximately 21% of New Mylan. Mylan shareholders will recognize gain for U.S. federal income tax purposes on the exchange of Mylan common shares for New Mylan ordinary shares.
Shares of New Mylan will continue to trade in the U.S. on the NASDAQ under Mylan's existing ticker symbol MYL.
The transaction has been unanimously approved by Mylan's board of directors and is expected to close in the first quarter of 2015, subject to certain closing conditions, including regulatory clearances and approval by Mylan's shareholders.