Mylan To Acquire Abbott's Non-U.S. Developed Markets Specialty And Branded Generics Business In An Al...
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`Mylan To Acquire Abbott's Non-U.S.
`Developed Markets Specialty And Branded
`Generics Business In An All-Stock Transaction
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`Print
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`Brings Differentiated, Attractive Product Portfolio and Enhanced Commercial Platform,
`Diversifying Mylan's Business and Adding New Sales Channels in Acquired Markets
`
`Immediately and Significantly Accretive to Earnings, with Opportunity to Accelerate Target of at
`Least $6.00 in Adjusted Diluted EPS in 20181
`Creates Significantly Enhanced Financial Flexibility and More Competitive Global Tax Structure
`for Future Opportunities
`PITTSBURGH,July 14,2014/PRNewswire/-- Mylan Inc. (NASDAQ:MYL)today announced that it
`has entered into a definitive agreement with Abbott (NYSE:ABT)whereby Mylan will acquire Abbott's
`non-U.S. developed markets specialty and branded generics business ("the Assets")in an all-stock
`transaction. Upon closing,Abbott will receive 105million shares of the combined company worth
`approximately $5.3billion based on Mylan's closing price of $50.20on Friday,July 11,2014,
`representing an approximately 21% ownership stake. The transaction will instantly further diversify
`Mylan's business and strengthen its commercial platform outside the U.S.,building new opportunities
`for growth and additional sales channels in the acquired markets. It also is expected to provide Mylan
`with significant additional financial firepower to pursue future opportunities,an additional $600million of
`annual post-close EBITDA,an optimized global taxstructure and enhanced balance sheet capacity.
`
`The Assets,which are being acquired
`on a debt-free basis,include an
`attractive portfolio of more than 100
`specialty and branded generic
`pharmaceutical 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. W ith a strong presence in Europe,Japan,Canada,Australia and New Zealand,the Assets
`are expected to provide approximately $1.9billion in annual additional revenues at deal close. The
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`http://newsroom.mylan.com/index.php?s=2429&item=123238
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`business includes an active sales organization of approximately 2,000representatives in more than 40
`non-U.S. markets,as well as two high-quality manufacturing facilities.
`
`Following the transaction,Mylan expects to have approximately $10billioni in pro forma 2014sales,
`adjusted EBITDA of approximately $3billion at transaction close,an attractive and diverse portfolio of
`more than 1,400specialty and generic products,an enhanced global commercial infrastructure,and an
`expanded high-quality manufacturing platform.
`
`Mylan Executive Chairman Robert J. Coury commented,"W e 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 taxstructure. 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."
`
`Mylan CEO Heather Bresch said,"W e 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. W e 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. W e 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."
`
`Bresch continued,"In addition to creating value for our shareholders,this transaction delivers on our
`mission of providing the world's 7billion people access to high-quality medicine. The Abbott team
`associated with this business shares Mylan's uncompromising commitment to quality,our high-
`performance culture and our passion for making a difference. W e look forward to welcoming them and
`their strong sales organization to Mylan and benefiting from their capabilities."
`
`"Mylan is the right organization for our developed markets branded generics business," said Miles D.
`W hite,Chairman and Chief Executive Officer of Abbott. "Mylan has the scale and breadth across
`critical distribution channels and a complementary portfolio that will quickly position this business for
`success. Mylan also shares our commitment to patients and product quality."
`
`Strategic Rationale
`
`This transaction further diversifies Mylan's business outside of the U.S. by adding a differentiated and
`attractive 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®,
`among others.
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`http://newsroom.mylan.com/index.php?s=2429&item=123238
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`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 U.S. 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,among others. 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®.
`
`Mylan expects to maximize the business's strong portfolio and attractive financial profile to drive
`enhanced financial performance from the business,including stabilizing revenues and growing EBITDA
`and EBITDA margins.
`
`Financial Highlights
`
`The transaction is expected to be immediately and significantly accretive to Mylan,with expected year
`one adjusted diluted EPS accretion of approximately $0.25,increasing thereafter through 2018. The
`combination is expected to deliver in excess of $200million in pre-taxoperational efficiencies by the
`end of year three post-close.
`
`Mylan's pro forma leverage at close is expected to be approximately 2.3xdebt-to-adjusted EBITDA,
`substantially below current levels,giving the company ample financial flexibility to pursue future
`opportunities. Strong cash flow generation will further enhance Mylan's balance sheet and financial
`flexibility and create additional shareholder value. Finally,the transaction is expected to lower Mylan's
`taxrate to approximately 20-21% in the first full year,and to the high teens thereafter,enhancing the
`company's competitiveness.
`
`Mylan believes this transaction gives it the potential to accelerate its previously stated financial targets
`for 2018,including at least $6.00in adjusted diluted EPS.ii
`
`Transaction Structure
`
`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 105million 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 taxpurposes on the exchange of Mylan common shares for New Mylan ordinary
`shares.
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`http://newsroom.mylan.com/index.php?s=2429&item=123238
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`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.
`
`Centerview Partners served as financial advisor to Mylan,and Cravath,Swaine & Moore LLP served
`as its legal advisor.
`
`Investor Call Information
`
`Mylan's management team will hold an investor conference call and webcast this morning at 8:00a.m.
`EDT to discuss the transaction. To participate in the conference call,please use the following dial-in:
`
`Conference ID :
`
`74158970
`
`Participant Toll-Free Dial-In Number : (800)514-4861
`
`Participant International Dial-In Number :(678)809-2405
`
`To access the live webcast,including the slide presentation,please go to the Investor Relations page
`of Mylan's website,mylan.com/investors,at least 15minutes before the event is scheduled to begin
`to register and download or install any necessary software. A replay of the webcast will be available at
`mylan.com/investors,for a limited time.
`
`Forward-Looking Statements
`
`This press release contains "forward-looking statements." These statements are made pursuant to the
`safe harbor provisions of the Private Securities Litigation Reform Act of 1995and may often be
`identified by the use of words such as "will","may","could","should," "would","project","believe",
`"anticipate","expect","plan," "estimate","forecast","potential","intend","continue","target" and
`variations of these words or comparable words. Such forward-looking statements include,without
`limitation,statements regarding the proposed acquisition of the Assets by Mylan,the expected
`timetable for completing the transaction,benefits and synergies of the transaction,future opportunities
`for the combined company and products and any other statements regarding Mylan's and the acquired
`business's future operations,anticipated business levels,future earnings,planned activities,
`anticipated growth,market opportunities,strategies,competition,and other expectations and targets for
`future periods. Because forward-looking statements inherently involve risks and uncertainties,actual
`future results may differ materially from those expressed or implied by such forward-looking
`statements. Factors that could cause or contribute to such differences include,but are not limited to:
`the parties' ability to meet expectations regarding the timing,completion and accounting and tax
`treatments of the transaction;changes in relevant taxand other laws;the parties' ability to
`consummate the transaction;the conditions to the completion of the transaction,including the receipt of
`approval of Mylan's shareholders;the regulatory approvals required for the transaction not being
`obtained on the terms expected or on the anticipated schedule;inherent uncertainties involved in the
`estimates and judgments used in the preparation of financial statements,and the providing of
`estimates of financial measures,in accordance with GAAP and related standards or on an adjusted
`basis;the integration of the acquired business by Mylan being more difficult,time-consuming or costly
`than expected;operating costs,customer loss and business disruption (including,without limitation,
`difficulties in maintaining relationships with employees,customers,clients or suppliers)being greater
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`than expected following the transaction;the retention of certain key employees of the acquired
`business being difficult;Mylan's and the acquired business's expected or targeted future financial and
`operating performance and results;the combined company's capacity to bring new products to market,
`including but not limited to where it uses its business judgment and decides to manufacture,market,
`and/or sell products,directly or through third parties,notwithstanding the fact that allegations of patent
`infringement(s)have not been finally resolved by the courts (i.e.,an "at-risk launch");the scope,timing
`and outcome of any ongoing legal proceedings and the impact of any such proceedings on Mylan's and
`the acquired business's consolidated financial condition,results of operations or cash flows;Mylan's
`and the acquired business's ability to protect their intellectual property and preserve their intellectual
`property rights;the effect of any changes in customer and supplier relationships and customer
`purchasing patterns;the ability to attract and retain key personnel;changes in third-party relationships;
`the impacts of competition;changes in economic and financial conditions of Mylan's business or the
`acquired business;uncertainties and matters beyond the control of management;and the possibility
`that Mylan may be unable to achieve expected synergies and operating efficiencies in connection with
`the transaction within the expected time-frames or at all and to successfully integrate the acquired
`business. For more detailed information on the risks and uncertainties associated with Mylan's
`business activities,see the risks described in Mylan's Annual Report on Form 10-K for the year ended
`December 31,2013filed with the Securities and Exchange Commission ("SEC"). You can access
`Mylan's Form 10-K through the SEC website at www.sec.gov,and Mylan strongly encourages you to
`do so. Mylan undertakes no obligation to update any statements herein for revisions or changes after
`the date of this press release.
`
`Non-GAAP Financial Measures
`
`Non-GAAP financial measures should be considered only as a supplement to,and not as a substitute
`for or as a superior measure to,financial measures prepared in accordance with GAAP.
`
`Additional Information and W here to Find It
`
`In connection with the proposed acquisition of the Assets by Mylan,New Mylan and Mylan intend to file
`relevant materials with the SEC,including a New Mylan registration statement on Form S-4that will
`include a proxy statement of Mylan that also constitutes a prospectus of New Mylan. INVESTORS
`AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND
`ANY OTHER RELEVANT DOCUMENTS W HEN THEY BECOME AVAILABLE BECAUSE THEY W ILL
`CONTAIN IMPORTANT INFORMATION ABOUT MYLAN,NEW MYLAN,THE ASSETS AND THE
`PROPOSED TRANSACTION. A definitive proxy statement will be sent to shareholders of Mylan
`seeking approval of the proposed transaction. The proxy statement/prospectus and other documents
`relating to the proposed transaction (when they are available)can be obtained free of charge from the
`SEC's website at www.sec.gov. These documents (when they are available)can also be obtained free
`of charge from Mylan upon written request to Mylan at 724.514.1813or
`investor.relations@ mylan.com.
`
`Participants in Solicitation
`
`This press release is not a solicitation of a proxy from any investor or shareholder. However,Mylan,
`New Mylan and certain of their directors and executive officers may be deemed to be participants in the
`solicitation of proxies in connection with the proposed transaction under the rules of the SEC.
`Information regarding Mylan's directors and executive officers may be found in its definitive proxy
`statement relating to its 2014Annual Meeting of Shareholders filed with the SEC on March 10,2014.
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`http://newsroom.mylan.com/index.php?s=2429&item=123238
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`This document can be obtained free of charge from the sources indicated above. Additional information
`regarding the interests of these participants will also be included in the proxy statement/prospectus
`when it becomes available.
`
`Non-Solicitation
`
`This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the
`solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction
`in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the
`securities laws of any such jurisdiction. No offer of securities shall be made except by means of a
`prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
`
`Mylan is a global pharmaceutical company committed to setting new standards in health care. W orking
`together around the world to provide 7billion people access to high quality medicine, we innovate to
`satisfy unmet needs; make reliability and service excellence a habit; do what's right, not what's easy;
`and impact the future through passionate global leadership. W e offer a growing portfolio of more than
`1,300 generic pharmaceuticals and several brand medications. In addition, we offer a wide range of
`antiretroviral therapies, upon which approximately 40% of HIV/AIDS patients in developing countries
`depend. W e also operate one of the largest active pharmaceutical ingredient manufacturers and
`currently market products in approximately 140 countries and territories. Our workforce of more than
`20,000 people is dedicated to improving the customer experience and increasing pharmaceutical
`access to consumers around the world. But don't take our word for it. See for yourself. See inside.
`mylan.com
`
`1 Stated 2018 target; targets beyond 2014 do not reflect Company guidance
`i Based on the midpoint of Mylan's guidance range for 2014
`ii Targets beyond 2014 do not reflect Company guidance
`Logo - http://photos.prnewswire.com/prnh/20140423/77793
`
`SOURCE Mylan Inc.
`
`For further information: Nina Devlin (Media), 724.514.1968; Kris King (Investors), 724.514.1813
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`http://newsroom.mylan.com/index.php?s=2429&item=123238
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