Mylan Laboratories to acquire Merck generics unit for $6.6 billion
14 May 2007
Mumbai:
Mylan Laboratories Inc of the United States has agreed
to acquire the generics business of Merck KGaA of Germany
for $6.6 billion ( 4.9 billion euros) in cash.
Merck said it plans to use the proceeds of the agreed
deal for a special dividend and to pay off debt. Merck
had accumulated net debt of 5.5 billion euros at end-March
following its 10.2 billion euro acquisition of Swiss biotech
firm Serono last year.
"We have achieved a very good price. We are very
pleased," Merck chief executive Karl-Ludwig Kley
said.
The deal, however, is subject to regulatory approval and
is expected to close in the second half of this year.
The combination would create "a vertically and horizontally
integrated generics and specialty pharmaceuticals leader
with a revenue base and a global footprint." Mylan
said in a statement.
The combined entity would have a revenue of about $4.2
billion and a gross profit of about $1.0 billion in 2006,
Mylan said.
At €4.9 billion, Mylan is paying about 2.7 times
last year sales of the Merck unit, roughly the same multiple
that Germany''s Stada paid for Hemofarm last year and 2.5
times higher than Barr aid for Pliva.
Mylan said Merrill Lynch, Citigroup and Goldman Sachs
would help finance the deal, and it would issue up to
$2 billion of equity and equity-linked securities to lower
its debt in the near term. The company is also suspending
its dividend payout.
Merck''s generics unit, with sales of 1.8 billion euros
in 2006, ranked fourth in the world behind Israel''s Teva
Pharmaceutical Industries, Swiss Novartis AG''s Sandoz
unit and US Barr Pharmaceuticals Inc.
The generics business of Merck, which operates in 90 countries,
makes branded drugs like EpiPen for treatment of life-threatening
allergic reactions, and DuoNeb for treatment of smokers''
lung.
Israel''s Teva and Iceland''s Actavis had been among the
potential buyers of Merck''s generics business.
Mylan is a global pharmaceutical company with market leading
positions in generic pharmaceuticals, transdermal technology
and unit dose packaged products. We focus on providing
an extensive line of affordable, high quality prescription
drugs in traditional and innovative dosage forms, and
we enjoy a well-deserved reputation for scientific expertise
in creating difficult-to-formulate and high-barrier-to-entry
generic products.
Mylan
operates through three principal subsidiaries: Mylan Pharmaceuticals,
a world leader in generic pharmaceuticals; Mylan Technologies,
the largest producer of generic and branded transdermal
patches for the US market; and UDL Laboratories, the top
US-supplier of unit dose pharmaceuticals
Mylan also owns a controlling interest in Matrix Laboratories,
one of the world''s premier suppliers of active pharmaceutical
ingredients (API). Mylan also has a European platform
through Docpharma, a Matrix subsidiary, which is a marketer
of branded generics in Europe.
