HERTFORDSHIRE, England
and PITTSBURGH and NEW
YORK, July 29, 2019
/PRNewswire/ -- Mylan N.V. (Nasdaq: MYL) and Pfizer Inc. (NYSE:
PFE) today announced a definitive agreement to combine Mylan with
Upjohn, Pfizer's off-patent branded and generic established
medicines business, creating a new global pharmaceutical company.
Under the terms of the agreement, which is structured as an
all-stock, Reverse Morris Trust transaction, each Mylan share would
be converted into one share of the new company. Pfizer shareholders
would own 57% of the combined new company, and Mylan shareholders
would own 43%. The Boards of Directors of both Mylan and Pfizer
have unanimously approved the transaction.
The new company will transform and accelerate each businesses'
ability to serve patients' needs and expand their capabilities
across more than 165 markets by bringing together two highly
complementary businesses. Mylan brings a diverse portfolio across
many geographies and key therapeutic areas, such as central nervous
system and anesthesia, infectious disease and cardiovascular, as
well as a robust pipeline, high-quality manufacturing and
supply chain excellence. Upjohn brings trusted, iconic brands, such
as Lipitor (atorvastatin calcium), Celebrex (celecoxib) and Viagra
(sildenafil), and proven commercialization capabilities, including
leadership positions in China and
other emerging markets.
The transaction will allow the new company to meaningfully
expand the geographic reach of Mylan's existing broad product
portfolio and future pipeline – including significant investments
that have been made across complex generics and biosimilars – into
new growth markets where Upjohn has existing sales infrastructure
and local market expertise.
The combination will drive a sustainable, diverse and
differentiated portfolio of prescription medicines, complex
generics, over-the-counter products and biosimilars supported by
commercial and regulatory expertise, established infrastructure,
best-in-class R&D capabilities and high-quality manufacturing
and supply chain excellence.
Financial Highlights
The new company is expected to
have pro forma 2020 revenues1 of $19 to $20 billion.
Pro forma 2020 adjusted EBITDA is anticipated to be in the range of
$7.5 to $8.0
billion, including phased synergies of approximately
$1 billion annually to be realized by
2023. Pro forma free cash flow for 2020 is expected to be more than
$4 billion.
The new company will be focused on returning capital to
shareholders, while maintaining a solid investment grade credit
rating. It expects to achieve a ratio of debt to adjusted EBITDA of
2.5x by the end of 2021. In addition, the new company intends to
initiate a dividend of approximately 25% of free cash flow
beginning the first full quarter after close and the potential for
share repurchases once the debt to adjusted EBITDA target is
sustained.
Leadership, Governance and Structure
The new company,
which will be renamed and rebranded at close, will be led by
Mylan's current Chairman Robert J. Coury, who will serve
as Executive Chairman of the new company; Michael Goettler, current Group President,
Upjohn, who will serve as Chief Executive Officer (CEO); and
Rajiv Malik, current Mylan President, who will serve as President.
Ken Parks, currently CFO of Mylan,
has agreed to depart the company at closing. Heather Bresch, Mylan's current CEO, will retire
from Mylan upon the close of this transaction.
The Board of Directors of the new company will include
its Executive Chairman and its CEO, as well as eight members
designated by Mylan, and three members designated by Pfizer, for a
total of thirteen members.
The new company will be domiciled in the U.S. and incorporated
in Delaware and will operate
Global Centers in Pittsburgh,
Pennsylvania; Shanghai,
China, and Hyderabad,
India.
Executive Commentary
Robert J.
Coury, Mylan Chairman, said, "Over the past year and a half,
I have spent a lot of time speaking with and listening attentively
to our shareholders. Today's announcement builds upon many of those
meaningful conversations and represents a transformative move for
Mylan. The new company, which combines the unique assets of Mylan
with the iconic brands of Pfizer's Upjohn business, will not only
accelerate our mission to serve the world's changing health needs,
but also further unlock the true value of our platform while
delivering attractive returns to shareholders for many years to
come. Importantly, the combined organization will have a presence
across nearly every continent and major market, establishing a new
leadership position in Asia, and
offering products capable of treating all major therapeutic areas.
This combination also further accelerates Mylan's longstanding
strategy to create the operational scale and commercial
capabilities necessary to provide the world's more than 7
billion people with access to medicine. As important, the
transaction we are announcing today will enhance the strength of
our balance sheet by scaling and increasing our existing strong
cash flows, providing the new company with the financial
flexibility to support and accelerate deleveraging and the expected
initiation of a meaningful dividend from the first full quarter
after the transaction closes. There will also be potential for
share repurchases once the long-term leverage target is achieved.
This powerful new profile positions the new company for sustained
success and long-term value creation."
Dr. Albert Bourla, Pfizer CEO,
stated, "We are creating a new champion for global health—one
poised to bring world-class medicines to patients across a wide
range of therapeutic areas. I believe that Mylan's unique profile
and strategy has made it the obvious partner of choice in creating
this powerful combination. By bringing Mylan's growth assets to
Upjohn's growth markets, we will create a financially strong
company with true global reach. I'm also excited about the
management team, which combines strong executive talent from both
companies, whose commitment to improving global health for patients
and to delivering returns to shareholders are great assets for the
new company. For Pfizer, this transaction represents our sharpened
focus on innovative medicines and is a testament to our purpose –
breakthroughs that change patients' lives. At the same time, we'll
maintain the financial flexibility to advance our strong pipeline,
invest for growth and continue to return capital to our
shareholders."
Coury continued, "The combination announced today also comes
with Mylan CEO Heather Bresch's
decision to announce her intention to retire upon deal close after
27 years of distinguished service and leadership within Mylan.
Heather has left a significant positive mark to the benefit of our
company, patients and shareholders in so many ways including
through her leadership and execution of our efforts to create a
more sustainable Mylan. Her leadership helped to further position
Mylan for this important milestone. Her presence and her impact
will not only be missed by our Board of Directors, but also by our
entire workforce of 35,000 across the world. We wish her much
success with her future endeavors."
Heather Bresch, Mylan CEO said,
"Mylan was founded nearly 60 years ago with the core purpose to
provide access to medicine. Thanks to the hard work and dedication
of thousands of Mylan employees and the transformative vision from
leaders past and present, including Board Chair Robert J. Coury, Mylan has made significant
strides toward providing that same access at a global level for the
world's 7 billion people. And now, the creation of this new company
introduces a powerful expanded platform with the potential for
patient impact that will be truly transformative and unique within
the industry. Nearly eight years after becoming CEO, I'm proud to
say that this milestone represents the culmination of the goals I
set for myself when I challenged Mylan and our amazing workforce to
set new standards in healthcare. And so, as the company prepares to
set out on this exciting new journey under the next era of
leadership, I too have decided to pursue a new chapter – one that
will continue to be focused on serving people, patients and public
health."
Coury continued, "Additionally, it is with great pleasure that I
welcome Michael Goettler, a seasoned
and high-quality pharma executive, as CEO of the new company. I am
also pleased that Rajiv Malik will
continue to serve in the role of president. Rajiv has been and
continues to be instrumental in the building and execution of our
true one-of-a-kind and very complex platform, and he will serve as
a strong complementary partner to Michael. Lastly, I would like to
thank Ken Parks for his leadership
and service to Mylan, which has provided significant value to our
company over the last three years, and know that he will continue
to do so as we work toward a successful deal close."
Michael Goettler, Group
President, Upjohn added, "I'm honored by the opportunity to lead
this new company, which will deliver more medicines to more
patients across the globe. I'm also excited to combine two talented
and deeply experienced teams that share a passion for providing
patients with access to medicines. I look forward to delivering on
that shared commitment by combining Mylan's broad and diverse
portfolio with Upjohn's iconic, trusted brands and bringing the
Mylan growth products to the Upjohn growth markets. I share
Robert's commitment to leading this new company with a focus on
total shareholder return and look forward to working with leaders
at the company towards that end."
Mark Parrish, Chair of Mylan's
Strategic Review Committee, said, "This compelling combination
concludes the work of Mylan's Strategic Review Committee, which
after our exhaustive review of available alternatives best
positions the company to unlock value for our shareholders."
A fact sheet and investor presentation are available
at https://championforglobalhealth.com.
Transaction Highlights
The combination will be
effected through a Reverse Morris Trust, under which Upjohn is
expected to be spun off or split off to Pfizer's shareholders and
simultaneously combined with Mylan. The transaction is
expected to be tax free to Pfizer and Pfizer shareholders and
taxable to Mylan shareholders. The transaction is
anticipated to close in mid-2020, subject to approval by Mylan
shareholders and customary closing conditions, including receipt of
regulatory approvals. No vote is required by Pfizer
shareholders. Upjohn will issue $12
billion of debt at or prior to separation, with gross debt
proceeds retained by Pfizer. Upon closing, the new company is
expected to have a solid investment grade credit rating. The new
company will have approximately $24.5
billion of total debt outstanding at closing.
Centerview Partners LLC and PJT Partners LP are serving as
Mylan's financial advisors, and Cravath, Swaine & Moore LLP and
NautaDutilh are serving as legal counsel to Mylan. Goldman, Sachs
& Co. LLC and Guggenheim Securities, LLC are serving as
Pfizer's financial advisors for the transaction. Wachtell, Lipton,
Rosen & Katz, and De Brauw Blackstone Westbroek are acting as
Pfizer's legal counsel and Davis
Polk and Wardwell LLP is serving as its special tax
counsel.
Preliminary Financial Profile for Pfizer Upon the Completion
of the Transaction
Pro forma for the separation of the
Upjohn business, Pfizer expects to generate 2020 revenues of
approximately $40 billion, driven by
its science-based Biopharmaceuticals Group, with its Innovative
Health business units (excluding Consumer Healthcare), including
biosimilars, as well as a Hospital business unit that
commercializes a global portfolio of patent-protected and
off-patent injectable and anti-infective medicines.
In addition, Pfizer anticipates achieving Income Before Tax
margins (expenses as a percentage of revenue plus other income and
deductions) in the mid-30s% range and operating cash flow of
$11 - $12
billion. Pfizer also expects that following the closing of
the transaction the combined dividend dollar amount received by
Pfizer shareholders in the event the equity distribution is
structured as a spinoff, based upon the combination of continued
Pfizer ownership and an expected 0.12 shares of the new company
granted for each Pfizer share, will equate to Pfizer's dividend
amount in effect immediately prior to closing.
Conference Call Information and Mylan Investor Day
Cancellation
Mylan and Pfizer invite investors and the
public to view and listen to a webcast of a live conference call
with investment analysts at 8:30 a.m. EDT on
Monday, July 29, 2019.
To view and listen to the webcast visit the following websites:
www.Mylan.com/investors and www.Pfizer.com/investors, and
click on the "Analyst and Investor Call to Discuss Proposed
Combination of Mylan and Upjohn" link, or directly at
https://www.webcaster4.com/Webcast/Page/748/31241.
Information on accessing and pre-registering for the webcast
will be available at www.Mylan.com/investors and
www.Pfizer.com/investors beginning today. Participants are advised
to pre-register in advance of the conference call.
You can also listen to the conference call by dialing either
(855) 895-8759 in the United
States and Canada or (503)
343-6044 outside of the United
States and Canada. The
password is "Analyst Call." Please join the call five minutes prior
to the start time to avoid operator hold times.
As a result of this announcement, Mylan is cancelling its
investor day meeting that had been scheduled for July 31, 2019.
Mylan Quarterly Results
In addition, during the call
Mylan will review its financial results for the second quarter
ended June 30, 2019. The Q2 2019
"Earnings Call Presentation," which will be referenced during the
call can be found at investor.mylan.com. A replay of the webcast
will also be available on the website for a limited time beginning
later this week.
Non-GAAP Financial Measures
This release includes the
presentation and discussion of certain financial information that
differs from what is reported under U.S. GAAP. These non-GAAP
financial measures, including, but not limited to, adjusted EBITDA,
free cash flow, ratio of debt to adjusted EBITDA and Income Before
Tax margins are presented in order to supplement investors' and
other readers' understanding and assessment of the financial
performance of the combined company and Pfizer. Non-GAAP measures
should be considered only as supplements to, not as substitutes for
or as superior measures to, the measures of financial performance
prepared in accordance with U.S. GAAP.
About Mylan
Mylan is a global pharmaceutical company
committed to setting new standards in healthcare. Working together
around the world to provide 7 billion people access to high quality
medicine, we innovate to satisfy unmet needs; make reliability and
service excellence a habit; do what's right, not what's easy; and
impact the future through passionate global leadership. We offer a
growing portfolio of more than 7,500 marketed products around the
world, including antiretroviral therapies on which more than 40% of
people being treated for HIV/AIDS globally depend. We market our
products in more than 165 countries and territories. We are one of
the world's largest producers of active pharmaceutical ingredients.
Every member of our approximately 35,000-strong workforce is
dedicated to creating better health for a better world, one person
at a time. Learn more at Mylan.com. We routinely post
information that may be important to investors on our website
at investor.Mylan.com.
About Upjohn
With over 130 years of experience in
improving patient lives, Pfizer Upjohn seeks to leverage our
portfolio, global experience and expertise to become the trusted
partner of choice for all stakeholders committed to improving
patient health. We focus on relieving the burden of
non-communicable diseases with trusted, quality medicines for every
patient, everywhere, with the goal of treating 225 million new
patients by 2025. Upjohn brings together 20 of the industry's most
trusted brands — products such as Lipitor®,
Norvasc®, Lyrica® and Viagra® —
with world-class medical, manufacturing and commercial expertise in
more than 120 countries. Upjohn's network of approximately 11,500
colleagues works together to be fast, focused and flexible to
ensure that patients around the world access the healthcare they
need.
About Pfizer: Breakthroughs That Change Patients'
Lives
At Pfizer, we apply science and our global resources
to bring therapies to people that extend and significantly improve
their lives. We strive to set the standard for quality, safety and
value in the discovery, development and manufacture of health care
products. Our global portfolio includes medicines and vaccines as
well as many of the world's best-known consumer health care
products. Every day, Pfizer colleagues work across developed and
emerging markets to advance wellness, prevention, treatments and
cures that challenge the most feared diseases of our time.
Consistent with our responsibility as one of the world's premier
innovative biopharmaceutical companies, we collaborate with health
care providers, governments and local communities to support and
expand access to reliable, affordable health care around the world.
For more than 150 years, we have worked to make a difference for
all who rely on us. We routinely post information that may be
important to investors on our website at www.Pfizer.com. In
addition, to learn more, please visit us on www.Pfizer.com and
follow us on Twitter at @Pfizer and @Pfizer News, LinkedIn,
YouTube and like us on Facebook at Facebook.com/Pfizer.
Cautionary Statement Regarding Forward-Looking
Statements
This communication contains "forward-looking
statements". These statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements may include, without
limitation, statements about the proposed transaction, the expected
timetable for completing the proposed transaction, the benefits and
synergies of the proposed transaction, future opportunities for the
combined company and products and any other statements regarding
Pfizer's, Mylan's and Upjohn's future operations, financial or
operating results, capital allocation, dividend policy, debt ratio,
anticipated business levels, future earnings, planned activities,
anticipated growth, market opportunities, strategies, competitions,
and other expectations and targets for future periods.
Forward-looking statements may often be identified by the use of
words such as "will", "may", "could", "should", "would", "project",
"believe", "anticipate", "expect", "plan", "estimate", "forecast",
"potential", "intend", "continue", "target" and variations of these
words or comparable words. Because forward-looking statements
inherently involve risks and uncertainties, actual future results
may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause or contribute
to such differences include, but are not limited to: the parties'
ability to meet expectations regarding the timing, completion and
accounting and tax treatments of the proposed transaction; changes
in relevant tax and other laws; the parties' ability to consummate
the proposed transaction; the conditions to the completion of the
proposed transaction, including receipt of approval of Mylan's
shareholders, not being satisfied or waived on the anticipated
timeframe or at all; the regulatory approvals required for the
proposed transaction not being obtained on the terms expected or on
the anticipated schedule or at all; inherent uncertainties involved
in the estimates and judgments used in the preparation of financial
statements and the providing of estimates of financial measures, in
accordance with the accounting principles generally accepted in
the United States of America
("U.S. GAAP") and related standards, or on an adjusted basis
("Non-GAAP measures"); the integration of Mylan and Upjohn being
more difficult, time consuming or costly than expected; Mylan's and
Upjohn's failure to achieve expected or targeted future financial
and operating performance and results; the possibility that the
combined company may be unable to achieve expected benefits,
synergies and operating efficiencies in connection with the
proposed transaction within the expected time frames or at all or
to successfully integrate Mylan and Upjohn; customer loss and
business disruption being greater than expected following the
proposed transaction; the retention of key employees being more
difficult following the proposed transaction; Mylan and Upjohn's
capacity to bring new products to market, including but not limited
to where it uses its business judgment and decides to manufacture,
market and/or sell products directly or through third parties,
notwithstanding the fact that allegations of patent infringement(s)
have not been finally resolved by the courts (i.e., an "at-risk
launch"); the scope, timing and outcome of any ongoing legal
proceedings and the impact of such proceedings on Mylan's and
Upjohn's consolidated financial condition, results of operations
and/or cash flows; Mylan's and Upjohn's ability to protect their
respective intellectual property and preserve their respective
intellectual property rights; the effect of any changes in customer
and supplier relationships and customer purchasing patterns; the
ability to attract and retain key personnel; changes in third-party
relationships; the impacts of competition; changes in the economic
and financial conditions of the business of Mylan or Upjohn; and
uncertainties and matters beyond the control of management and
other factors described under "Risk Factors" in each of Pfizer's
and Mylan's Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and other filings with the SEC. You can access Pfizer's or
Mylan's filings with the SEC through the SEC website at www.sec.gov
or through Pfizer's or Mylan's website, and Pfizer and Mylan
strongly encourage you to do so. Except as required by applicable
law, Pfizer, Mylan or Upjohn undertake no obligation to update any
statements herein for revisions or changes after the date of this
communication.
Additional Information and Where to Find
It
This release shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended (the "Securities Act"). In connection with the proposed
combination of Upjohn Inc. ("Upjohn"), a wholly owned subsidiary of
Pfizer Inc. ("Pfizer") and Mylan N.V. ("Mylan"), which will
immediately follow the proposed separation of Upjohn from Pfizer
(the "proposed transaction"), Upjohn, Mylan and Mylan I B.V., a
wholly owned subsidiary of Mylan, ("Mylan Newco") intend to file
relevant materials with the Securities and Exchange Commission
("SEC"), including a registration statement on Form S-4 that will
include a proxy statement/prospectus relating to the proposed
transaction. In addition, Upjohn expects to file a
registration statement in connection with its separation from
Pfizer. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENTS, PROXY STATEMENT/PROSPECTUS AND ANY OTHER
RELEVANT DOCUMENTS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT MYLAN, UPJOHN, MYLAN NEWCO AND
THE PROPOSED TRANSACTION. A definitive proxy statement will be sent
to shareholders of Mylan seeking approval of the proposed
transaction. The documents relating to the proposed transaction
(when they are available) can be obtained free of charge from the
SEC's website at www.sec.gov. These documents (when they are
available) can also be obtained free of charge from Mylan, upon
written request to Mylan, at (724) 514-1813 or
investor.relations@mylan.com or from Pfizer on Pfizer's internet
website at
https://investors.Pfizer.com/financials/sec-filings/default.aspx or
by contacting Pfizer's Investor Relations Department at (212)
733-2323.
Participants in the Solicitation
This release is not a
solicitation of a proxy from any investor or security holder.
However, Pfizer, Mylan, Upjohn and certain of their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies in connection with the proposed
transaction under the rules of the SEC. Information about the
directors and executive officers of Pfizer may be found in its
Annual Report on Form 10-K filed with the SEC on February 28, 2019, its definitive proxy statement
and additional proxy statement relating to its 2019 Annual Meeting
filed with the SEC on March 14, 2019
and on April 2, 2019, respectively,
and Current Report on Form 8-K filed with the SEC on June 27, 2019. Information about the directors
and executive officers of Mylan may be found in its amended Annual
Report on Form 10-K filed with the SEC on April 30, 2019, and its definitive proxy
statement relating to its 2019 Annual Meeting filed with the SEC on
May 24, 2019. These documents can be
obtained free of charge from the sources indicated above.
Additional information regarding the interests of these
participants will also be included in the proxy
statement/prospectus when it becomes available.
1 2020 Proforma Outlook Reflects Lyrica U.S. LOE and
China Volume Based Procurement
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