By Lisa Kerner
Charlotte, N.C., May 14 - Mylan Laboratories Inc. entered into a definitive agreement to acquire Merck KGaA's generics business for $6.7 billion in an all-cash transaction slated to close in the second half of 2007.
The transaction has received fully committed debt financing from Merrill Lynch, Citigroup and Goldman Sachs, as well as unanimous approval by Mylan's board of directors.
Mylan said it expects to achieve synergies of approximately $250 million by the end of year three and does not anticipate significant reductions in headcount at Mylan or Merck Generics.
The combined company will generate substantial free cash flow that will further enable Mylan to rapidly reduce acquisition-related debt, the company said. Mylan is suspending the dividend on its common stock.
On a pro forma basis for calendar 2006, the combined company would have had revenues of $4.2 billion, EBITDA of about $1.0 billion and roughly 10,000 employees, according to a company news release.
Hank Klakurka will remain president and chief executive officer of Merck Generics, and Mylan has executed long-term employment agreements with members of Merck Generics' senior management team.
"Mylan's acquisition of Merck Generics would substantially complete the execution on one of its long-term visions: to create a world-class global quality generics leader," Mylan vice chairman and chief executive officer Robert J. Coury said in the release.
"Mylan is already a leader in the United States, the world's largest market, and through Matrix Laboratories controls one of the broadest [active pharmaceutical ingredients] platforms in the world. The combination with Merck Generics will significantly extend our range of therapeutic categories and dosage forms, and bring us a number of new, differentiated products and successful franchises."
Mylan is a Pittsburg pharmaceutical company that operates Mylan Pharmaceuticals Inc., Mylan Technologies Inc. and UDL Laboratories Inc., as well as a controlling interest in Secunderabad, India-based Matrix Laboratories Ltd.
Merck Generics is a subsidiary of the pharmaceutical company Merck, which is located in Darmstadt, Germany.
| Acquirer: | Mylan Laboratories Inc.
|
| Target: | Merck Generics
|
| Transaction value: | $6.7 billion
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| Announcement date: | May 14
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| Expected closing: | Second half of 2007
|
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