Pharmaceutical companies Pfizer and Mylan have reached a deal under which Mylan would combine with Upjohn, Pfizer’s off-patent medicines business, to create a new company.

Under the deal, which is structured as an all-stock, reverse Morris trust transaction, Pfizer shareholders would own 57% of the combined new company, and Mylan shareholders would own 43%. The deal comes as pharmaceutical companies are facing pressure to bring prescription drug prices under control.

The new company, which will be named and branded at deal close, is expected to have 2020 revenue of $19 billion to $20 billion and is part of a years-long effort to split Pfizer into three parts. The deal would leave Pfizer with innovative drugs, including cancer drug Ibrance and pneumonia vaccine Prevnar.

The deal “reduces exposure to the U.S. generics market [and] it brings access to sales and marketing talent from the Upjohn side that Mylan can leverage to market products both in the U.S. and outside,” SVB Leerink analyst Ami Fadia said.

Michael Goettler, president of Pfizer’s generics unit, will be CEO of the new company. Mylan’s current chairman, Robert Coury, will be executive chairman. Mylan CFO Ken Parks agreed to leave the company at closing. Mylan CEO Heather Bresch will retire on closing.

The board of directors of the new company will include the executive chairman, CEO, and eight members designated by Mylan. Three members will be designated by Pfizer.

Pfizer said Upjohn will issue $12 billion of debt at or prior to the separation, and the proceeds would be retained by Pfizer. The new company would have approximately $24.5 billion of total debt outstanding at closing.

Centerview Partners and PJT Partners are acting as Mylan’s financial advisers. Goldman Sachs and Guggenheim Securities are Pfizer’s financial advisors.

Shares of Mylan were up 15% in early trading Monday. They had fallen by about a third this year.

Joe Raedle/Getty Images

, , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *