Mylan/Abbott Laboratories established products
Deal Value: $5.7 billion
Mylan's ($MYL) deal to buy Abbott Laboratories' ($ABT) generics business in developed countries comes with a grab bag of benefits. It will double its sales in Europe and expand its total revenues by about 30%, while also adding to its bottom line. It gets a boatload of new plants and sales infrastructure in places where it didn't have much, which will help it with drug launches down the road. The structure of the deal, creating a Netherlands-based operation and then merging with it, was supposed to also provide big tax advantages, but the two had to tweak the terms a bit after the U.S. Treasury threw cold water on tax inversion deals.
The 100 branded and generic drugs that Mylan is buying racked up sales of about $2 billion in 2013 in Europe, Japan, Canada, Australia and New Zealand. Mylan also gets manufacturing units in France and Japan that will help it with a variety of products along with a much larger sales force that it says will help it expand sales of its current portfolio, including its EpiPen branded injection for anaphylactic shock, as well as products to be rolled out down the line.
|Mylan CEO Heather Bresch|
"This enhanced commercial platform will help us drive the continued expansion of EpiPen Auto-Injector globally and enable us to more effectively launch important growth drivers, such as respiratory and biologics," CEO Heather Bresch said when the deal was announced. The company said added sales heft will also help with planned launches of copies of Teva Pharmaceutical Industries' ($TEVA) multiple sclerosis blockbuster Copaxone and GlaxoSmithKline's ($GSK) Advair, which is sold outside the U.S. as Seretide.
The deal, initially formed with tax benefits in mind, will put that part of its business into a new company in the Netherlands and then Mylan will merge with that entity, giving Abbott shares that will amount to a 21% stake. Abbott has indicated it will only be a short-term investor and will sell its shares to finance other interests.
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