- 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 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. 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
$600 million of annual post-close
EBITDA, an optimized global tax structure and enhanced balance
sheet capacity.
Logo - http://photos.prnewswire.com/prnh/20140423/77793
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. With
a strong presence in Europe,
Japan, Canada, Australia and New
Zealand, the Assets are 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.
Following the transaction, Mylan expects to have approximately
$10 billioni in pro forma
2014 sales, adjusted EBITDA of approximately $3 billion at transaction close, an attractive
and diverse portfolio of more than 1,400 specialty and generic
products, an enhanced global commercial infrastructure, and an
expanded high-quality manufacturing platform.
Mylan Executive Chairman Robert J.
Coury commented, "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.
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,
"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."
Bresch continued, "In addition to creating value for our
shareholders, this transaction delivers on our mission of providing
the world's 7 billion 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.
We 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.
White, 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.
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 $200 million in
pre-tax operational efficiencies by the end of year three
post-close.
Mylan's pro forma leverage at close is expected to be
approximately 2.3x debt-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 tax rate 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 $6.00 in 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 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.
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 8:00 a.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 15 minutes 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 1995 and 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 tax and 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 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,
2013 filed 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 Where 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-4
that 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 WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL 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 724.514.1813 or
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 2014 Annual Meeting
of Shareholders filed with the SEC on March
10, 2014. 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. Working together around the world to
provide 7 billion 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. We 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. We 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