Mylan To Acquire Swedish Specialty Pharma Company Meda for $7.2 BillionBy
Mylan N.V. has recommended a public offer to the shareholders of Meda Aktiebolag, a Swedish specialty pharmaceutical company, to tender all their shares in Meda to Mylan for SEK 165 ($19.5) per Meda share for a total equity value of approximately SEK 60.3 billion ($7.2 billion). The total value of the offer for all Meda shares, including Meda net debt, is approximately SEK 83.6 ($9.9 billion).
Meda had 2015 sales of approximately SEK 19.65 billion ($2.3 billion). Meda employs approximately 4,500 people, including a salesforce and marketing organization of more than 2,600. Approximately 60% of Meda’s product sales are in the prescription area and approximately 40% are in non-prescription or over-the-counter (OTC) products. Approximately half of Meda’s revenues derive from products in three key therapeutic areas: respiratory, dermatology, and pain. Approximately 62% of Meda’s sales are generated in Western Europe (the largest countries being Italy, Germany, France and Sweden), 19% in emerging markets (driven by China, Russia, the Middle East and Thailand) and 17% in the US. Meda has a network of seven manufacturing facilities in Europe, the US and India.
Following Mylan’s completion of the acquisition of Meda, the combined company would have 2015 sales of approximately $11.8 billion. The combination of Mylan and Meda creates a company positioned in branded, generic, and OTC products, which include a combined approximate $1 billion OTC portfolio. The combined business would have a portfolio of more than 2,000 products across the branded/specialty, generics, and OTC segments, sold in more than 165 markets. The acquisition provides Mylan with entry into a number of emerging markets, including China, Southeast Asia, Russia, the Middle East and Mexico, complemented by Mylan’s presence in India, Brazil and Africa. Mylan and Meda have complementary therapeutic areas, such as in respiratory/allergy and a growing combined presence in dermatology and pain.
Mylan's offer has been unanimously approved by Mylan’s board of directors and unanimously recommended by Meda’s board of directors. Meda’s two largest shareholders, representing in the aggregate approximately 30% of Meda’s outstanding shares, have undertaken to accept the offer, subject to certain conditions. The offer is subject to the satisfaction of a number of customary conditions, including clearance from relevant competition authorities, and is expected to be completed by the end of the third quarter of 2016. The offer is not subject to approval by Mylan shareholders and is not subject to any financing conditions.
Mylan's move to acquire Meda follows its unsuccessful efforts in 2015 to acquire Perrigo, a specialty pharmaceutical and over-the-counter drug company. Mylan lost its seven-month effort to acquire Perrigo in November 2015 after failing to secure at least 50% of the shares in its tender offer for Perrigo. Mylan, however, made other deals in 2015 to add to its specialty and generics portfolio, which includes the acquisition of Abbott's non-US developed markets specialty and branded generics businesses. With the Abbott acquisition, Mylan gained more than 100 specialty and branded generic pharmaceutical products in five major therapeutic areas, which included several patent protected, novel and/or hard-to-manufacture products, according to Mylan's 2014 annual filing. Also in 2015, Mylan certain female health care businesses from Famy Care Limited, a specialty women’s healthcare company with a focus in generic oral contraceptive products. Mylan says following the Meda deal, the company retains ample financial flexibility to pursue additional external opportunities.
The companies expect to achieve pre-tax annual operational synergies of approximately $350 million by year four after consummation of the offer are expected to be realized as a result of savings associated with integration and optimization across cost components and functions, and through leveraging opportunities of the combined commercial platform. Components of these synergies include: (1) optimization of the combined commercial platform, (2) optimization of cost of goods sold through supply chain, vertical integration, and global sourcing efforts, (3) elimination of redundant general and administrative costs, including public company costs, and (4) cross-fertilization opportunities of the combined product portfolio.
Mylan says that the integration of Mylan and Meda will likely entail some changes to the organization, operations, and employees of the combined group. Mylan said it will determine the optimal structure of the combined company in the future, but that there are currently no decisions on any material changes to Mylan’s or Meda’s employees and management or to the existing organization and operations, including the terms of employment and locations of the business.