NEW YORK (Reuters) - U.S. generic
drugmaker Mylan Inc is in advanced talks to acquire a
multibillion-dollar portfolio of established products from Abbott
Laboratories, people familiar with the matter said.
The proposed transaction, which is in late-stage discussions, would
see Mylan acquire a big chunk of Abbott's Europe-based mature drugs
for several billion dollars, said the people, who asked not to be
named because the matter is not public.
The acquisition of the foreign assets, according to some of the
people, could also allow the U.S. company to change its tax address
to overseas, a practice known as inversion that has become popular
among healthcare companies seeking to cut their tax bills and gain
access to cash held offshore.
The exact value of Mylan's bid could not be learned, but people
familiar with the matter previously told Reuters that Abbott was
looking to sell a portfolio of mature drugs that could fetch more
than $5 billion. A deal could come as soon as next week, but the
discussions are continuing and could still fall apart, the people
Abbott’s established pharmaceuticals division is headquartered in
Basel, Switzerland and had 2013 sales of roughly $5 billion. About
half of the sales come from emerging markets, and the remainder from
other international markets. Representatives for Mylan declined to
comment, while Abbott did not respond to requests for comment.
A potential deal with Abbott would come after Mylan's failed attempt
to buy Swedish drugmaker Meda AB earlier this year. Meda in April
rejected Mylan's revised $6.7 billion takeover bid, saying its
biggest shareholder did not back a deal.
Mylan was looking to do an inversion deal partly because it was at a
disadvantage compared with foreign rivals as well as other U.S.
generic drugmakers that have redomiciled to a low-tax country.
Major competitors include Teva Pharmaceuticals Industries Ltd, which
is based in Israel, and Actavis Plc, which re-domiciled to Ireland
through a 2013 acquisition of Warner Chilcott. Both face lower tax
Tax inversions allow U.S. companies, which face one of the highest
tax rates in the world - a federal tax rate of 35 percent, and an
overall rate that can be close to 40 percent, including state and
local taxes - to move to a lower-tax country by buying or creating a
new holding company.
The deal would add to a flurry of dealmaking in the healthcare
sector, which more than tripled to $317.4 billion in the first half
of 2014 from the same period last year.
Reuters first reported in May that Abbott has tapped Morgan Stanley
to find a buyer for the off-patent drugs so that it can free up
resources to invest in high-growth areas.
Other large pharmaceutical companies including GlaxoSmithKline Plc,
Sanofi SA and Merck & Co Inc are also looking to shed older drugs,
many of which have lost patent protection and face shrinking sales.
Faced with healthcare spending cuts and generic competition, the
pharmaceutical industry is undergoing a major restructuring, with
companies playing to their strengths by building up certain
businesses and divesting others.
(Reporting by Soyoung Kim in New York; Editing by Chris Reese, Gunna
Dickson and Diane Craft)