- Total Gross Proceeds From All Divestitures, Including the
2022 Divestiture of the Company's Biosimilars Business, and the
Estimated Retained Value are in Line with the Company's Previously
Communicated Range
- Strategic Decision Made to Retain Rights and Opportunities
for Viagra®, Dymista® and Select Over-the-Counter (OTC) Products in
Certain Markets Representing Approximately $1.6B in Estimated Retained Value
- Total Transactions Value Represents up to $6.94B of Total Gross Proceeds Which Represents
an Accretive Multiple of 12.4x [1]
- Offer for Substantially All of OTC Business Reflects Gross
Consideration of up to Approximately $2.17B, Representing an Estimated Accretive
Multiple of 12.8x; Definitive Agreements for Active Pharmaceutical
Ingredients (API) and Women's Healthcare Reflect Gross Proceeds of
up to Approximately $1.2B,
Representing an Estimated Accretive Multiple of 9.9x
- Combined Divestitures Would Result in up to 12 Facilities
and More Than 6,000 Employees Representing Approximately 15 Percent
of the Company's Global Workforce Being Conveyed, Substantially
Simplifying the Organization
- Today's Announced Divestitures Expected to Close by the End
of the First Half of 2024, Subject to Regulatory Approvals,
Consultations and Other Closing Conditions
- Completion of Divestitures Will Bring Successful Conclusion
to All Phase 1 Efforts and Commitments, Including Prioritizing Use
of Net Proceeds for Debt Paydown to Reach Gross Leverage Target
[1] of 3.0x in the First Half of 2024
PITTSBURGH, Oct. 1, 2023
/PRNewswire/ -- Viatris Inc. (NASDAQ: VTRS), a global healthcare
company, today announced it has received an offer for the
divestiture of substantially all of its Over-the-Counter (OTC)
business, and has entered into definitive agreements to divest its
Women's Healthcare business, its Active Pharmaceutical Ingredients
(API) business in India and
commercialization rights in certain non-core markets that were
acquired as part of the Upjohn Transaction.
Viatris CEO Scott A.
Smith said: "I am very excited about today's
announcement as it marks an important milestone in the execution of
our overall strategic plan. Not only will this bring to conclusion
all of our Phase 1 commitments, including the expected achievement
of our deleveraging target of 3 times gross leverage in the first
half of 2024, importantly it will also set the Company up extremely
well as we enter into our Phase 2 strategy for 2024 and beyond.
Smith continued: "Since joining Viatris, I have had the
opportunity to review these divestitures more closely. After
taking this closer look, I have made the decision to retain our
rights for Viagra and Dymista, as well as other select OTC assets
within certain markets as we see further opportunities for these
products within Viatris. Needless to say, I am extremely pleased
with our excellent overall results — reaching the Company's
previously communicated range on both aggregate value and multiple
while also retaining important assets — despite the challenging
external macro-economic environment in which we had to execute. In
addition, we achieved our goal of substantially simplifying the
organization as we increase our focus on areas with the greatest
potential to accelerate our growth, patient impact and shareholder
value. We are committed to ensuring a successful transition for our
colleagues, our partners, our customers and the patients we
serve."
Total Divestitures Summary
With this announcement the Company has delivered on its
commitment to announce agreements on all planned divestitures by
the end of 2023 within the Company's previously communicated range,
after considering the estimated retained value. Including gross
proceeds from the Company's completed biosimilars divestiture, the
Company expects to realize gross proceeds representing a multiple
above 12x on 2022 estimated Adjusted EBITDA for its portfolio of
divested assets. The gross proceeds to the Company from all
divestitures under the terms of the agreements are up to
$6.94 billion, or up to approximately
$5.2 billion in estimated aggregate
net proceeds, taking into consideration taxes and other costs,
including related transaction costs. The Company made the strategic
decision to retain rights for Viagra®, Dymista®, and select
OTC products in certain markets representing estimated retained
value of approximately $1.6 billion
applying the OTC multiple of 12.8x to the 2022 estimated Adjusted
EBITDA of $125 million attributable
to the retained business. Total gross proceeds from all planned
divestitures and estimated retained value are in line with the
Company's previously communicated range. Viatris intends to
prioritize the use of net proceeds from the divestitures for debt
paydown. The application of such proceeds is expected to achieve a
gross leverage target of 3.0x in the first half of 2024, completing
all Viatris' Phase 1 commitments which the Company believes will
position it to accelerate growth and increase shareholder return as
it enters Phase 2 of its strategic plan in 2024. In addition, the
Company expects that completing the divestitures would
substantially simplify the organization. Under the terms of the
today's announced divestitures, up to12 facilities and more than
6,000 employees, representing 15 percent of the Company's global
workforce, may be conveyed.
[1] Non-GAAP measures; see "Non-GAAP Financial
Measures" below for more information. "Multiple" refers to
estimated transaction value as a multiple of estimated 2022
Adjusted EBITDA; see "Total Divestitures Summary" for more
information.
Overview of the Transactions
The transactions are subject to regulatory approvals, completion of
any consultations with employee representatives (where applicable),
receipt of required consents and other closing conditions,
including, in the case of the API business divestiture, a financing
condition.
Viatris has received an offer from Cooper Consumer Health,
a leading European over-the-counter drug manufacturer and
distributor. Subject to the completion of consultations with
applicable works councils, the offer grants Viatris the
right to divest substantially all of its OTC business, including
two manufacturing sites located in Merignac, France, and Confienza, Italy, and a Research & Development
(R&D) site in Monza, Italy.
The Company will retain rights for Viagra®, Dymista® and select OTC
products in certain markets. The transaction would be expected to
close in Q2 2024.
Viatris has executed an agreement to divest its API business in
India to Iquest Enterprises, a
privately held pharmaceutical company, also based in India. The transaction includes three
manufacturing sites and a R&D lab in Hyderabad, three manufacturing sites in Vizag
and third-party API sales. Viatris will retain some selective
R&D capabilities in API. The transaction is expected to close
in Q1 2024.
Viatris has also executed an agreement to divest its Women's
Healthcare business, primarily related to oral and injectable
contraceptives, to Insud Pharma, a leading Spanish
multinational pharmaceutical company. The transaction includes two
manufacturing facilities in India:
one in Ahmedabad and one in Sarigam. The transaction is expected to
close in Q1 2024.
Separately, in another transaction, Viatris entered into an
agreement to divest its rights to women's healthcare products
Duphaston® and Femoston® to Theramex, a leading global
specialty pharmaceutical company dedicated to women's health. The
transaction is expected to close in Q4 2023.
Viatris has also executed agreements to divest commercialization
rights in certain non-core markets that were part of the
combination with Upjohn in which the Company had no established
infrastructure prior to or following the transaction. These
transactions are expected to be completed in Q4 2023.
Viatris also posted a "Divestitures Announcement" presentation,
dated October 1, 2023, on its website
at investor.viatris.com.
Advisors
Cravath, Swaine & Moore LLP and Saraf & Partners served as
legal advisors to Viatris in the transactions;
PricewaterhouseCoopers LLP served as an advisor and Jefferies
International Limited served as a financial advisor.
About Viatris
Viatris Inc. (NASDAQ: VTRS) is a global healthcare company uniquely
positioned to bridge the traditional divide between generics and
brands, combining the best of both to more holistically address
healthcare needs globally. With a mission to empower people
worldwide to live healthier at every stage of life, we provide
access at scale. In 2022 alone, we supplied high-quality medicines
to approximately 1 billion patients around the world. With our
exceptionally extensive and diverse portfolio of medicines, a
one-of-a-kind global supply chain designed to reach more people
when and where they need them, and the scientific expertise to
address some of the world's most enduring health challenges, access
takes on deep meaning at Viatris. We have the ability to touch all
of life's moments, from birth to end of life, acute conditions to
chronic diseases. We are headquartered in the U.S., with
global centers in Pittsburgh,
Shanghai and Hyderabad, India. Learn more at
viatris.com and investor.viatris.com, and connect with us on
Twitter, LinkedIn, Instagram and YouTube.
Forward-Looking Statements
This release 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, Viatris
announces agreements on remaining planned divestitures, and upon
closing would achieve its original total target of a multiple above
12x on 2022 estimated adjusted EBITDA; total gross proceeds from
all divestitures, including the 2022 divestiture of the company's
biosimilar business, and the estimated retained value are in line
with the company's previously communicated range; strategic
decision made to retain rights and opportunities for Viagra®,
Dymista® and select OTC products in certain markets representing
approximately $1.6B in estimated
retained value; total transaction value represents up to
$6.94B of total gross proceeds which
represents an accretive multiple of 12.4x; offer for substantially
all of OTC business reflects gross consideration of up to
approximately $2.17B, representing an
estimated accretive multiple of 12.8x; definitive agreements for
API and Women's Healthcare reflect gross proceeds of up to
approximately $1.2B, representing an
estimated accretive multiple of 9.9x; combined divestitures would
result in up to 12 facilities and more than 6,000 employees
representing approximately 15 percent of the company's global
workforce being conveyed, substantially simplifying the
organization; today's announced divestitures expected to close by
the end of the first half of 2024, subject to regulatory approvals,
consultations and other closing conditions; completion of
divestitures will bring successful conclusion to all phase 1
efforts and commitments, including prioritizing use of net proceeds
for debt paydown to reach gross leverage target of 3.0x in the
first half of 2024; announced it has received an offer for the
divestiture of substantially all of its OTC business, and has
entered into definitive agreements to divest its Women's Healthcare
business, API business in India
and commercialization rights in certain non-core markets that were
acquired as part of the Upjohn Transaction; today's announcement
marks an important milestone in the execution of our overall
strategic plan; not only will this bring to conclusion all of our
Phase 1 commitments, including the expected achievement of our
deleveraging target of 3 times gross leverage in the first half of
2024, importantly, it will also set the Company up extremely well
as we enter into our Phase 2 strategy for 2024 and beyond; we
achieved our goal of substantially simplifying the organization as
we increase our focus on areas with the greatest potential to
accelerate our growth, patient impact and shareholder value;
we are committed to ensuring a successful transition for our
colleagues, our partners, our customers and the patients we serve;
the information in the table titled "Total Divestitures Summary"
and the related footnotes; the gross proceeds to the Company from
all divestitures under the terms of the agreements are up to
$6.94 billion, or up to approximately
$5.2 billion in estimated aggregate
net proceeds, taking into consideration taxes and other costs,
including related transaction costs; the Company made the strategic
decision to retain rights for Viagra®, Dymista®, and select OTC
products in certain markets representing estimated retained value
of approximately $1.6 billion
applying the OTC multiple of 12.8x to the 2022 estimated Adjusted
EBITDA of $125 million attributable
to the retained business; total gross proceeds from all planned
divestitures and estimated retained value are in line with the
Company's previously communicated range; the application of such
proceeds is expected to achieve a gross leverage target of 3.0x in
the first half of 2024, completing all Viatris' Phase 1 commitments
which the Company believes will position it to accelerate growth
and increase shareholder return as it enters Phase 2 of its
strategic plan in 2024; additional details about the planned
divestitures and expected closing timelines in the section
"Overview of the Transactions"; the goals or outlooks with
respect to the Viatris Inc.'s ("Viatris" or the "Company")
strategic initiatives, including but not limited to the Company's
two-phased strategic vision and potential divestitures (including
the divestitures announced today) and acquisitions; the benefits
and synergies of acquisitions, divestitures (including the
divestitures announced today) or our global restructuring program;
estimated retained value for the retained products rights announced
today; future opportunities for the Company and its products; and
any other statements regarding the Company's future operations,
financial or operating results, capital allocation, dividend policy
and payments, stock repurchases, debt ratio and covenants,
anticipated business levels, future earnings, planned activities,
anticipated growth, market opportunities, strategies, competitions,
commitments, confidence in future results, efforts to create,
enhance or otherwise unlock the value of our unique global
platform, 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", "pipeline", "intend", "continue", "target", "seek" 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 divestitures announced today not being
completed on the expected timelines or at all; the risk that the
conditions set forth in the agreements with respect to such
divestitures will not be satisfied or waived; failure to realize
the total transaction value for the divestitures and/or the
expected proceeds for any or all of the divestitures, including as
a result of any purchase price adjustment or a failure to achieve
any conditions to the payment of any contingent consideration; the
possibility that the Company may be unable to realize the intended
benefits of, or achieve the intended goals or outlooks with respect
to, its strategic initiatives (including the divestitures announced
today); the possibility that the Company may be unable to achieve
expected benefits, synergies and operating efficiencies in
connection with acquisitions, divestitures (including the
divestitures announced today), or its global restructuring program
within the expected timeframe or at all; the risk that the Company
may elect not to exercise its option to accept the offer with
respect to the OTC business; goodwill or other impairment charges
or other losses related to the divestiture or sale of businesses or
assets (including the divestitures announced today); the Company's
failure to achieve expected or targeted future financial and
operating performance and results; the potential impact of public
health outbreaks, epidemics and pandemics, including the ongoing
challenges and uncertainties posed by the COVID-19 pandemic;
actions and decisions of healthcare and pharmaceutical regulators;
changes in relevant laws, regulations and policies and/or the
application or implementation thereof, including but not limited to
tax, healthcare and pharmaceutical laws, regulations and policies
globally (including the impact of recent and potential tax reform
in the U.S. and pharmaceutical product pricing policies in
China); the ability to attract and
retain key personnel; the Company's liquidity, capital resources
and ability to obtain financing; any regulatory, legal or other
impediments to the Company's ability to bring new products to
market, including but not limited to "at-risk launches"; success of
clinical trials and the Company's or its partners' ability to
execute on new product opportunities and develop, manufacture and
commercialize products; any changes in or difficulties with the
Company's manufacturing facilities, including with respect to
inspections, remediation and restructuring activities, supply chain
or inventory or the ability to meet anticipated demand; the scope,
timing and outcome of any ongoing legal proceedings, including
government inquiries or investigations, and the impact of any such
proceedings on the Company; any significant breach of data security
or data privacy or disruptions to our information technology
systems; risks associated with having significant operations
globally; the ability to protect intellectual property and preserve
intellectual property rights; changes in third-party relationships;
the effect of any changes in the Company's or its partners'
customer and supplier relationships and customer purchasing
patterns, including customer loss and business disruption being
greater than expected following an acquisition or divestiture; the
impacts of competition, including decreases in sales or revenues as
a result of the loss of market exclusivity for certain products;
changes in the economic and financial conditions of the Company or
its partners; uncertainties regarding future demand, pricing and
reimbursement for the Company's products; uncertainties and matters
beyond the control of management, including but not limited to
general political and economic conditions, inflation rates and
global exchange rates; and 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 U.S. GAAP and related standards or on an
adjusted basis. For more detailed information on the risks and
uncertainties associated with Viatris, see the risks described in
Part I, Item 1A of the Company's Annual Report on Form 10-K for the
year ended December 31, 2022, as
amended, and our other filings with the SEC. You can access
Viatris' filings with the SEC through the SEC website at
www.sec.gov or through our website, and Viatris strongly encourages
you to do so. Viatris routinely posts information that may be
important to investors on our website at investor.viatris.com, and
we use this website address as a means of disclosing material
information to the public in a broad, non-exclusionary manner for
purposes of the SEC's Regulation Fair Disclosure (Reg FD). The
contents of our website are not incorporated into this press
release or our filings with the SEC. Viatris undertakes no
obligation to update any statements herein for revisions or changes
after the date of this press release other than as required by
law.
In particular, certain statements in this release relate to
Viatris' Phase 2 strategy in 2024 and beyond and its related goals,
targets, forecasts, objectives and commitments (such statements,
the "Phase 2 Outlooks"). Viatris believes that the assumptions used
as a basis for these Phase 2 Outlooks are reasonable based on the
information available to management at this time. However, this
information is not fact, and you are cautioned not to place undue
reliance on any such information. While certain of these statements
might use language that imply a level of certainty about the
likelihood that Viatris will attain these Phase 2 Outlooks, it is
possible that Viatris will not attain them in the timeframe noted
or at all. These Phase 2 Outlooks reflect assumptions as to certain
business decisions that are subject to change. Important factors
that may affect actual results and cause these Phase 2 Outlooks not
to be achieved, or that may change the underlying variables and
assumptions on which these Phase 2 Outlooks were based and cause
these Phase 2 Outlooks to differ materially, include, but are not
limited to, risks and uncertainties relating to our planned
acquisitions and divestitures (including the divestitures announced
today), including whether such transactions are completed on the
expected timelines or at all, failure to achieve the anticipated
benefits of any acquisitions or divestitures (including the
divestitures announced today), failure to receive the anticipated
cash proceeds of any or all divestitures, inability to manage base
business erosion, failure to bring new products to market on the
expected timeframes or at all, failure to execute stock repurchases
consistent with current expectations, stock price volatility,
higher than anticipated SG&A, gross margins and R&D spend,
industry performance, interest rate volatility, foreign exchange
rates, tax rates, the regulatory environment and general business
and economic conditions, as well as those set forth in the first
paragraph of "Forward-Looking Statements". Further, these Phase 2
Outlooks cover multiple years and such information by its nature
becomes less reliable with each successive year. Accordingly, there
can be no assurance that any aspect of these Phase 2 Outlooks will
be realized or that actual results will not differ materially.
Therefore, you should construe these statements regarding these
Phase 2 Outlooks only as goals, targets and objectives rather than
promises of future performance or absolute statements.
Non-GAAP Financial Measures
This press release
includes the presentation and discussion of certain financial
information that differs from what is reported under accounting
principles generally accepted in the
United States ("U.S. GAAP"). These non-GAAP financial
measures, including, but not limited to, 2022 estimated adjusted
EBITDA from divested assets, 2022 estimated adjusted EBITDA of
retained products, 2022 estimated adjusted EBITDA of other non-core
assets] and gross leverage target are presented in order to
supplement investors' and other readers' understanding and
assessment of the financial performance of Viatris. For 2022,
Viatris calculated consolidated adjusted EBITDA as U.S. GAAP net
earnings (loss) adjusted for income tax provision (benefit),
interest expense and depreciation and amortization (to get to
EBITDA) and further adjusted for share-based compensation expense,
litigation settlements and other contingencies, net, Biocon
Biologics Limited gain on divestiture, impairment of goodwill
related to assets held for sale and restructuring, acquisition and
divestiture related and other special items. Investors and other
readers should consider non-GAAP measures 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.
Gross Leverage Target
The stated forward-looking
non-GAAP financial measure of long-term gross leverage target of
3.0x, with a range of 2.8x – 3.2x, is based on the ratio of (i)
targeted notional gross debt and (ii) targeted Adjusted EBITDA.
However, the Company has not quantified future amounts to develop
this target but has stated its goal to manage notional gross debt
and adjusted earnings and adjusted EBITDA over time in order to
generally maintain or reach the target. This target does not
reflect Company guidance. Notional gross debt is the sum of the
Company's long-term debt, including current portion, and short-term
borrowings and other current obligations, adjusted for net premiums
on various debt issuances and deferred financing fees.
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