Mylan weighs move for Swedish rival Meda
Mylan Inc, the US generic drug producer, is eyeing the takeover of Swedish rival Meda in a deal that would create a $23bn-plus pharmaceutical business as the US healthcare industry goes through one of the largest shake-ups in its history.
Pennsylvania-based Mylan has appointed advisers to help it put together a deal for Meda, according to people familiar with the situation. The process is at a preliminary stage, however, and no deal is certain.
The exact value of a takeover could not be ascertained, but a person familiar with the matter said Mylan would likely pay a “significant” premium to Meda’s market value, which stood at SKr29.5bn ($4.5bn) at the end of Thursday trading. Mylan’s market value is $18.5bn.
An acquisition, which is likely to be largely paid for with stock, would slash Mylan’s tax bill. The prospect reflects the trend among US businesses of doing so-called “inversions”, whereby a company uses an overseas acquisition to relocate its headquarters, thus avoiding US corporate tax obligations.
The practice of inversions has come under fire recently, with President Barack Obama outlining proposals in March’s budget that would all but end the tax switch. The existing rules allow a US company to forgo its domestic tax status if it acquires a company in a deal that transfers more than 20 per cent of the shares to foreign owners.
Under the Obama administration’s new proposal, that share ownership threshold would be raised to 50 per cent, meaning a US company would have to buy a company larger than itself to meet the criteria.
Pharmaceutical companies have been among the most active users of inversions because they typically have operations and income spread over many countries, which allows them to keep their profits outside the US once they move headquarters.
Mylan, which posted $6.8bn of revenue in the year to December 31, employs 20,000 people across 140 countries and generates less than half of its sales in the US.
Meda’s former chief executive officer, Anders Lönner, stepped down after 14 years last October and was succeeded by Jörg-Thomas Dierks, the company’s former chief operating officer.
The Swedish’s group’s portfolio includes respiratory, allergy and erectile dysfunction products. Mylan’s products range from generic pharmaceuticals and brand medications to antiretroviral therapies for the treatment of HIV/Aids.
US drugmakers, hospitals, insurers and doctors are battling to find new ways to secure their business models as Mr Obama pushes through sweeping reforms to the country’s healthcare system.
Mylan had no comment. Meda could not immediately be reached.