Mylan to buy fellow drugmaker Meda for $7.2bn

April 2016 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

Leading global pharmaceutical company, Mylan NV, has announced its acquisition of Swedish pharmaceutical firm Meda Aktiebolag in a cash-and-stock deal worth $7.2bn – a combination seen as a platform for sustainable, long-term growth.

Following completion of the acquisition, the combined company will be a diversified global pharmaceutical leader, with a balanced portfolio of more than 2000 products across the branded/specialty, generics and OTC segments, sold in more than 165 markets around the world, particularly the US and Europe.

The acquisition of Meda also provides Netherlands-based Mylan with entry into a number of new and attractive 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 a highly complementary therapeutic presence, which will create a leading global player in respiratory/allergy, and achieve critical mass in dermatology and pain, offering greater opportunities for growth in these categories.

“Our acquisition of Meda will allow us to accelerate and deliver on the clear and compelling vision and strategy we have continuously communicated to our shareholders, and once again deliver a transaction that will create significant value,” said Robert Coury, Mylan’s executive chairman. “Meda is a unique and strategic asset, with a high quality workforce, which will add to our powerful, diversified and sustainable global platform and provide exciting new opportunities for Mylan, its shareholders and all of our other stakeholders.”

The Mylan/Meda transaction is expected to be immediately accretive to Mylan earnings, with accretion increasing significantly after the first full year (2017) as synergies are realised. Additionally, pre-tax annual operational synergies of approximately $350m are expected to be achieved by year four after consummation of the deal.

Mylan intends to finance the cash portion of the acquisition through a new bridge credit facility arranged by Deutsche Bank Securities Inc. and Goldman Sachs Bank USA. The company also intends to list the Mylan shares to be issued in the deal on the NASDAQ Global Select Market in the United States and the Tel Aviv Stock Exchange in Israel.

Mr Coury continued: “We believe Mylan is uniquely positioned in the global pharmaceutical space today, with very strong fundamentals and a long and successful track record of executing on all previous acquisitions and organic opportunities. We structured this transaction in a way that optimizes our balance sheet and still leaves us ample financial flexibility to continue to complement our business with additional attractive opportunities.”

Likewise, senior executives at Meda believe that the transaction is a compelling strategic fit, particularly in an environment where scale and reach are becoming increasingly important.

“Over the course of more than 10 years, I have been privileged to first be a part of, and more recently to lead, Meda,” said Meda’s chief executive, Dr. Jörg-Thomas Dierks. “I believe that Meda is an exceptional organization that has continued to go from strength to strength and has a strong and well-defined growth profile going forward.

“The proposed transaction with Mylan is very compelling from a strategic standpoint and I believe Meda will be a strong partner for Mylan and will bring additional value to Mylan. The two businesses are highly complementary, and the combined business will benefit from strong therapeutic presence in respiratory/allergy, dermatology and pain and inflammation, as well as enhancing our mass in Europe and US presence.”

The transaction has been unanimously approved by Mylan’s board of directors and unanimously recommended by Meda’s board of directors. The deal is subject to the satisfaction of a number of customary conditions, including clearance from relevant competition authorities, but is not subject to approval by Mylan shareholders.

The Mylan/Meda transaction is expected to close by the end of the third quarter of 2016.

Fraser Tennant