There are reports indicating that Pfizer Inc. (NYSE:PFE) wants to merge its off-patent drug operations in a stock deal with generic drug maker Mylan (NASDAQ:MYL) whose market value is estimated at $9.5 billion.
Pfizer to get $12 billion from sale of debt
The pharmaceutical company is will spin off its new unit so that it can create a bigger seller of generic and off-patent medicines that include best-seller brands Viagra and Lipitor. According to sources privy with the merger Pfizer shareholders will receive 60% of interest in the new business while those of Mylan will get the remaining 40%. From the all-stock deal Pfizer will get close to $12 billion from the sale of debt.
The plans have not been made public and neither of the two companies have confirmed or denied the news. A Pfizer spokeswoman declined to comment on the news stating that contents of the reports were just speculative.
The new company will get a new name and shall be domiciled in the US and will sell Pfizer’s Viagra and Mylan’s EpiPen. The transaction will be structured in a reverse Morris trust and will see the Upjohn businesses of Pfizer being divested before merging with Mylan.
New company to total $20 billion in annual sale
The newly formed entity is expected to register annual sales of over $20 billion. Mylan has a drug and portfolio of over 7,500 which includes generic drugs and biosimilar drugs and in 2018 the company reported sales of close to $11.4 billion. On the other hand Pfizer which is renowned for drugs such as Xanax, Viagra and remedies like Advil reported Q1 sales of $3 billion while its total revenue for 2018 was round $53.6 billion. Pfizer is yet to break out its FY numbers for Upjohn unit that is based in China.
The new company will be led by Michael Goettler the president of Pfizer’s Upjohn business and Robert Coury the chairman of Mylan will become the executive Chairman. Heather Bresch the current CEO of Mylan is expected to leave after seven years in the company.