Risk

Mylan to Pay 92% Premium for Sweden’s Meda

After a relentless pursuit, pharmaceutical firm Mylan pays a large premium to acquire a company that sells over-the-counter drugs.
Matthew HellerFebruary 11, 2016

Mylan NV has agreed to acquire Meda for about $7.2 billion, representing a hefty premium for the Swedish drug maker, which it began pursuing in 2014.

Mylan will pay 165 Swedish kronor ($19.62) per share, a 92% premium over Meda’s closing price of 86.05 kronor on Wednesday and more than Meda’s all-time high of 150.80 kronor. The stock closed Thursday at $143.90, up 67%.

“It’s one of the highest premiums ever paid in a pharmaceutical industry deal worth $5 billion or more, though it’s in the middle of the pack as a multiple of earnings,” Bloomberg said.

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Meda makes branded, over-the-counter, and generic drugs and already handles European sales of EpiPen, Mylan’s emergency shot for severe allergic reactions and its biggest-selling branded product. In 2014, the Swedish firm rebuffed two takeover offers from Mylan for as much as $6.7 billion.

“Meda brings us greater scale, breadth, and diversity across products, geographies, and sales channels, and together we will have an even stronger global commercial infrastructure,” Mylan CEO Heather Bresch said in a news release.

“We have been very clear about our commitment to enter the [over-the counter] space and continue our expansion in emerging markets and, with this transaction, we will have an approximately $1 billion OTC business at close and gain entry into new growth markets such as China, Southeast Asia, Russia, and the Middle East,” she added.

According to Bloomberg, the deal will “shift the composition of Mylan’s portfolio, reducing its reliance on generic drugs so that they make up about half of sales.”

Mylan, which has a legal address in the Netherlands and is run from Canonsburg, Pa., has been attempting to expand and diversify through deals. In November, it lost a $26 billion hostile bid for Perrigo, a maker of over-the-counter drugs.

Mylan renewed its pursuit of Meda last summer and the two sides continued talks throughout the fall, Bresch said. “We believe we are paying an attractive multiple that is in line with market precedents for such scarce, high-quality assets,” she said.