Generics specialist Mylan N.V. said it would buy Sweden's Meda AB for about SEK83.6 billion (US$9.9 billion), including debt, in a combination of cash and stock.
The deal, cleared by Mylan's board and recommended to shareholders, has gained the go-ahead from the two largest owners with about 30 percent of the firm: Stena Sessan Rederi AB (21 percent) and Fidim Srl (9 percent). Expected to be finished by the end of the third quarter of this year, the buyout would create a drug behemoth of branded, generic, and over-the-counter drugs, and would let Mylan already in India, Brazil and Africa enter new markets such as China, Southeast Asia, Russia, the Middle East and Mexico.
Solna, Sweden-based Meda's board recommended that shareholders accept the terms, though the firm previously has turned Mylan away. An approach in the spring of 2014 made headlines when Meda rejected at least two offers. Mylan, in April of last year, turned its attention elsewhere, proposing to acquire Dublin-based Perrigo Co. plc for $205 per share, which would have been paid in an undisclosed combination of cash and Mylan stock, valuing Perrigo at approximately $28.9 billion. The hostile takeover was rejected in November. (See BioWorld Today, April 9, 2015.)
In the Meda transaction, offering SEK165 per share, Mylan is paying a premium of about 92 percent compared to the closing share price of SEK86.05 each on the Nasdaq Stockholm market Wednesday.
The cash consideration will total about SEK48.2 billion, financed by a new bridge credit facility arranged by Deutsche Bank Securities Inc. and Goldman Sachs Bank in the U.S.
Pre-tax annual operational synergies of about $350 million are expected to be achieved by the fourth year after the deal is done, and it's likely accretive right away to Mylan earnings, with the benefit increasing significantly after the first full year (2017), according to the company. Specifically, Mylan said the buyout could mean 35 cents to 40 cents earnings per share (EPS) accretion in 2017, accelerating the guidance of $6 in adjusted EPS.
Though headquartered in Hertfordshire, U.K., where the business is managed, Mylan earlier this year incorporated under the laws of the Netherlands.
Also today, the firm reported fourth-quarter earnings that fell a little short of some analysts' hoped-for EPS gains, but Mylan offered a 2016 adjusted diluted EPS guidance range of $4.85 to $5.15, for year-over-year growth of 16 percent, whether the Meda deal goes through or not. The same is true of 2016 total revenues, estimated at $10.5 billion to $11.5 billion, the firm said.