Mylan closes $5.3B tax-lowering deal with Abbott Labs
Generic drugmaker Mylan NV officially moved its corporate address to the Netherlands on Friday when it completed its acquisition of an overseas business unit from Abbott Laboratories for $5.3 billion in stock.
The controversial move allows Mylan to reduce its U.S. tax bill and gives a financial boost to its strategy of growing through acquisitions.
Mylan officials, who will continue to run the company from headquarters offices in Cecil, said the deal with North Chicago-based Abbott expands Mylan's revenue and geographic reach by giving it Abbott's generics operations in Europe, Canada, Japan, New Zealand and Australia.
“This transaction significantly enhances our ability to pursue additional highly strategic and financially accretive opportunities,” CEO Heather Bresch said.
Bresch has said the generics industry is ripe for consolidation. Mylan announced this month that it would acquire parts of Famy Care Ltd.'s women's care business in a deal that could be worth more than $800 million.
Based in Mumbai, India, Famy makes a variety of contraceptives and hormone-replacement therapy products that are sold in 90 countries, including emerging markets in Africa, India and Brazil.
The Abbott and Famy purchases follow Mylan's $1.75 billion acquisition in 2013 of Agila, a business unit of India's Strides Arcolab Ltd. that specializes in manufacturing injectable medications.
Mylan had said the Abbott deal will add $2 billion to Mylan's annual revenue, bringing it to about $10 billion in 2015, and will lower Mylan's tax rate to 20 to 21 percent in the first full year, down from about 25 percent. The company expects its tax rate to be in the high teens in three to five years.
The tax-lowering strategy, known as an inversion, has drawn criticism from U.S. politicians who are concerned that the government could lose billions in tax dollars. The Treasury Department in the fall tightened rules to make inversions less lucrative. Despite threats, Congress failed to pass legislation that would have outlawed the deals.
Abbott owns 22 percent of Mylan as part of the deal, but has said it intends to quickly sell its stake.
Mylan shares closed Friday at $57.33, up 8 cents.
Mylan Executive Chairman Robert J. Coury said closing the purchase marks the “next exciting chapter” for the company.
“With the completion of this transaction, we will benefit from significantly enhanced financial flexibility, an optimized global tax structure and greater balance sheet capacity, all of which position us exceptionally well for future opportunities,” Coury said.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.
