Drug company Pfizer Inc has announced plans to combine its off-patent business with the Mylan NV line to form a generic drug giant that might have a better outlook in the increasing competitive American pharmaceuticals market. You might recognize Pfizer’s “off-patent” labels as the cholesterol drug Lipitor and the male-impotence drug Vagra.
If the deal goes through, the company could announce it as early as Monday. It would likely be an all stock deal, with Mylan shareholders receiving just north of 40 percent of the new company and Pfizers investors taking the rest, of course. Mylan’s shares have fallen by almost 50 percent over the past year, reducing its market value to $9.5 billion, and could surely use a bit of a boost.
Should everything go according to the plan, Pfizer’s off-patent drug unit head Michael Goettler is expected to take on the chief executive role of the combined company. In addition, Mylan Chairman Robert Coury will be executive chairman while current Mylan CEO Heather Bresch plans to leave the company. Mylan President Rajiv Malik will also be leaving the company, but he is also facing civil suits over his potential participation in a price-fixing scheme.
Also the newly united business entities would have a headquarters in the US, taking them out of Dutch governance that has long frustrated Mylan investors, qualifying essentially, as a takeover defense. Finally, as part of the deal, the new company will be able to refinance the debt(s) currently held by Mylan as well as the subsidiary of Pfizer.
It should also be noted that Pfizer will get roughly $12 billion from proceeds collected after selling the debt.