Mylan Inc. has agreed to acquire Abbott’s non-US developed markets specialty and branded generics business (i.e., the assets) in an all-stock transaction for  approximately $5.3 billion. 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. The deal would provide Abbott an approximately 21% ownership stake in the combined company and Mylan a 79% stake.

Upon closing, 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. Shares of New Mylan will continue to trade in the US 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.

Following the transaction, Mylan expects to have approximately $10 billion in pro forma 2014 sales and a portfolio of more than 1,400 specialty and generic products, The deal is expected to diversify Mylan’s business and strengthen its commercial platform outside the US. The business to be sold operates in Europe, Japan, Canada, Australia, and New Zealand and includes approximately 3,800 employees. The assets include more than 100 specialty and branded generic pharmaceutical products in five major therapeutic areas (cardio/metabolic, gastrointestinal, anti-infective/respiratory, central nervous system/pain, and women’s and men’s health) and include several patent protected, novel and/or hard-to-manufacture products. The assets are expected to provide approximately $1.9 billion in annual additional revenues to Mylan at deal close. 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 business being acquired by Mylan includes  sales organization of approximately 2,000 representatives in more than 40 non-US markets as well as two manufacturing facilities in Japan and France. Abbott will retain its product portfolio and manufacturing facilities in other geographies as well as its manufacturing facilities in the Netherlands, Germany, and Canada. Following the closing of the transaction, Abbott’s branded generics pharmaceuticals business will focus in emerging markets. The branded generics business that will remain with Abbott generated 2013 sales of $2.9 billion and is expected to have a sales growth rate in the upper-single to double digits, according to Abbott.

In  a press statement,  ​Mylan CEO Heather Bresch said: “We targeted this differentiated business with a complementary portfolio of attractive specialty and branded generic products, many of which have strong continued growth potential. 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. 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. We have experience successfully integrating large, complex transactions such as this one, and we are confident in our ability to deliver the value inherent from this combination.”

As part of its focus on emerging markets, in May, Abbott announced the acquisition of the Latin American pharmaceutical company CFR Pharmaceuticals. In June, it agreed to acquire a controlling interest in Veropharm, a leading Russian pharmaceutical manufacturer.

Source: Mylan and Abbott