Mylan has been hunting for a buy. Now, it's found one. The Pittsburgh-based generics specialist ($MYL) is buying a big chunk of Abbott Laboratories' ($ABT) drug business, in a stock swap worth $5.3 billion. With $2 billion in annual sales, the products would jack up Mylan's top line by almost 30%.
The deal, which covers 100 branded and generic meds, adds heft to Mylan's operations in developed countries outside the U.S. Along with the products, Mylan gets Abbott's commercial infrastructure in a host of countries, putting its own meds--including its branded injection for anaphylactic shock, EpiPen--in line for sales growth, the company says.
New launches will reap the benefits, too, CEO Heather Bresch said in a statement. Those planned rollouts include copies of Teva Pharmaceutical Industries' ($TEVA) multiple sclerosis heavyweight Copaxone, and a key respiratory drug from GlaxoSmithKline ($GSK), Advair, which is sold outside the U.S. as Seretide.
"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," Bresch said, adding, "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."
Besides boosting its $7 billion in sales to $9 billion, the deal will also beef up Mylan's bottom line immediately, the company said in a statement Monday. Mylan expects a 25-cents-per-share increase in earnings per share for 2014, with more to come. That's partly because of its plans to chop $200 million in costs from the combined company.
Plus, as a stock swap, the Abbott drug buy will keep Mylan's cash stash intact. Its $500 million share buyback plan can continue--or even expand. Abbott will carve out that section of its business, creating a new Netherlands-based company. Mylan will then merge with the new company, giving Abbott $5.3 billion in shares as payment. That leaves Abbott with a 21% stake.
The Abbott buy is something of a counterbalance to Mylan's recent spate of partnerships and buyouts in emerging markets, particularly in India. Mylan has teamed up with Gilead Sciences ($GILD) to roll out HIV drugs in the country, launched a biosimilar version of Roche's ($RHHBY) blockbuster cancer drug Herceptin in partnership with India's Biocon, and snapped up a series of Indian plants and development facilities.
Mylan also nabbed India-based Agila Specialties, the injectables unit of Strides Arcolab, in a $1.6 billion deal last year, but that buyout included a hefty commercial and manufacturing network around the world, including in the U.S.
- read the release from Mylan
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