Daily Management Review

Swedish drugmaker Meda to be Bought by Mylan in a $7.2 Billion Deal


Swedish drugmaker Meda to be Bought by Mylan in a $7.2 Billion Deal
In its third attempt to buy the Swedish company, Generic drug maker Mylan NV said it would acquire Meda AB in a $7.2 billion cash-and-stock deal.
Mylan had unsuccessfully pursued for seven months to acquire smaller rival Perrigo and the recent move comes three months after the company gave up the bid for Perrigo.
After it announced the 165 Swedish crowns per share offer, Mylan's stock fell about 8 pct in extended trading. Some analysts questioned the veru high premium as the amount announced works out to be nearly twice Meda's last traded price.
"The deal may be earnings accretive, but Mylan is paying a huge premium in a deteriorating market," Clinical Assistant Professor Erik Gordon, from the Ross School of Business at the University of Michigan said.
The fourth-quarter results of the company underwhelmed analysts' estimates both in terms of profit and revenue and the announcement of the takeover came alongside results. Chief Executive Heather Bresch indicated over a post-earnings conference call with analysts that Mylan is still on the prowl for deals.
Branded, over-the-counter and generic drugs are manufactured by Meda. Sale of EpiPen, Mylan's emergency shot for severe allergic reactions and its biggest selling branded product, in Europe is already handled by it.
The offer was recommended by Meda's board and valued the company at $9.9 billion, including debt, Mylan said.  the offer, recommended by Meda's board, valued the company at $9.9 billion, including debt.
The offer has been accepted by the two largest shareholders of Meda, who own about 30 percent of the specialty pharmaceutical's outstanding shares, Mylan added.
After its biggest shareholder rejected the deal in 2014, Meda spurned takeover offers from Mylan.
With a 20.7 percent stake, the biggest shareholder in Meda is Stena Sessan Rederi AB, controlled by the Olsson business family.
"Both companies have changed considerably since then," Meda's board chairman Martin Svalstedt told media. He also highlighted the recent acquisitions made by both drugmakers.
The purchase of Abbott Inc's specialty and generics business in developed markets outside the United States by Mylan last year has helped the company to shift its tax address to the Netherlands.
Weeks after the Italian firm scrapped flotation plans, Meda in July 2014 unveiled its biggest deal ever - the $3.1 purchase of Rottapharm.
"We have now a stronger business fit….but the industrial landscape is the biggest change since 2014," said Svalstedt.
A bridge credit facility arranged by Deutsche Bank and Goldman Sachs would be used to finance the cash portion of the offer Mylan said.
The company said that there would be immediate addition to the company earnings after the completion of the deal which is expected to happen by the third quarter.
Centerview Partners was Mylan's financial adviser and Cravath, Swaine & Moore LLP, Vinge, and NautaDutilh its legal advisers. Rothschild & Co served as Meda's financial adviser.