Filed by Mylan Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Mylan Inc.
Commission File No.: 1-9114
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Filed by Mylan Inc. Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: Mylan Inc. Commission File No.: 1-9114
Mylan Acquisition of
Abbott’s Non-U.S. Developed Markets Specialty and Branded Generics Business
July 14, 2014
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Legal Matters
Forward Looking Statements
This presentation contains “forward-looking statements.” These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and 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. Such forward-looking statements include, without limitation, statements regarding the proposed acquisition of Abbott’s non-U.S. developed markets specialty and branded generics business (the “Assets”) by Mylan Inc. (“Mylan”), the expected timetable for completing the transaction, benefits and synergies of the transaction, future opportunities for the combined company and products and any other statements regarding Mylan’s and the acquired business’s future operations, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, competition, and other expectations and targets for future periods. 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 transaction; changes in relevant tax and other laws; the parties’ ability to consummate the transaction; the conditions to the completion of the transaction, including the receipt of approval of Mylan’s shareholders; the regulatory approvals required for the transaction not being obtained on the terms expected or on the anticipated schedule; 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 GAAP and related standards or on an adjusted basis; the integration of the acquired business by Mylan being more difficult, time-consuming or costly than expected; operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) being greater than expected following the transaction; the retention of certain key employees of the acquired business being difficult; Mylan’s and the acquired business’s expected or targeted future financial and operating performance and results; the combined company’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 any such proceedings on Mylan’s and the acquired business’s consolidated financial condition, results of operations or cash flows; Mylan’s and the acquired business’s ability to protect their intellectual property and preserve their 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 economic and financial conditions of Mylan’s business or the acquired business; uncertainties and matters beyond the control of management; and the possibility that Mylan may be unable to achieve expected synergies and operating efficiencies in connection with the transaction within the expected time-frames or at all and to successfully integrate the acquired business. For more detailed information on the risks and uncertainties associated with Mylan’s business activities, see the risks described in Mylan’s Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission (“SEC”). You can access Mylan’s Form 10-K through the
SEC website at www.sec.gov, and Mylan strongly encourages you to do so. Mylan undertakes no obligation to update any statements herein for revisions or changes after the date of this presentation.
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Legal Matters, cont’d
Non-GAAP Financial Measures
Non-GAAP financial measures should be considered only as a supplement to, and not as a substitute for or as a superior measure to, financial measures prepared in accordance with GAAP.
Additional Information and Where to Find It
In connection with the proposed acquisition of Abbott’s non-U.S. developed markets specialty and branded generics business (the
“Assets”) by Mylan, Mylan and New Mylan B.V., a wholly owned subsidiary of Mylan (“New Mylan”), intend to file relevant materials with the SEC, including a New Mylan registration statement on Form S-4 that will include a proxy statement of Mylan that also constitutes a prospectus of New Mylan. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MYLAN, NEW MYLAN, THE ASSETS AND THE PROPOSED TRANSACTION. A definitive proxy statement will be sent to shareholders of Mylan seeking approval of the proposed transaction. The proxy statement/prospectus and other 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.
Participants in Solicitation
This presentation is not a solicitation of a proxy from any investor or shareholder. However, Mylan, New Mylan and certain of their 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 regarding Mylan’s directors and executive officers may be found in its definitive proxy statement relating to its 2014 Annual Meeting of Shareholders filed with the SEC on March 10, 2014. This document 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.
Non-Solicitation
This communication 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.
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The Right Next Strategic Transaction for Mylan
Compelling Strategic Fit
Enhances
Financial Flexibility for Future
Brings differentiated and attractive specialty and branded generics product portfolio
Further diversifies Mylan’s business and bolsters presence in non-U.S. geographies
Expands commercial platform in Mylan’s largest non-U.S. developed markets, building reach to physicians and patients Enhances infrastructure and expertise to maximize growth drivers (e.g. EpiPen® Auto-Injector, respiratory, biologics)
Expected to be approximately $0.25 accretive in first full year and increasing thereafter through 2018
Mylan expects to maintain double-digit revenue and EBITDA growth rates through 2018 on a pro-forma basis Strong cash flow, substantial balance sheet capacity and more competitive global tax structure at close creates significant additional financial flexibility for future opportunities
Positions Mylan for next phase of growth
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Complements Mylan’s Organic Growth Plan
EpiPen® Health care Auto-solutions Injector
Expansion Injectables
PROTECT AND GROW THE CORE
Operating Core platform Business
EXECUTE ON OUR GROWTH DRIVERS
Complex
Respiratory products
Infectious Biologics Disease
Opportunity to accelerate target of at least $6.00 adjusted diluted EPS in 2018(1)
(1) Stated 2018 target; long-term targets beyond 2014 do not reflect Company guidance
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A Differentiated Asset and Strong Strategic Fit
Diverse Geographic Footprint
Attractive Portfolio
Broad Infrastructure and Capabilities
Abbott’s specialty and branded generics business in non-U.S. developed markets
Strong presence across Europe, Japan, Canada, Australia and New Zealand
Diverse portfolio of more than 100 specialty and branded generic products in five major therapeutic areas
80% of 2013 sales concentrated in top 10 major markets ~90% specialty/branded generics and ~10% OTC
Includes novel and hard-to-manufacture products
Continued growth potential from patent-protected and off-patent products with no generic competitor
3,800 employees including ~2,000 sales representatives across more than 40 markets
2 high-quality manufacturing sites in Japan and France
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Brings Attractive, Durable Branded Portfolio
Vaccines Other
Women’s / ?Vaccine against seasonal flu
Men’s Health
?Pregnancy / Infertility
?Urology & Testosterone Cardio-Metabolic ?Hypertension (ARBs, CCBs, ACEIs, Others) ?Dyslipidemia
5%?Other (Arrhythmia)
4%
7% 30%
CNS / Pain
?Pain & fever 16% ?Migraine??Vertigo and
Meniere’s disease
17% 21%
Hokunalin
Anti-Infective / Respiratory Gastro
H. Pylori infections
Dyspnea assoc. with asthma, bronchitis
Pancreatic Exocrine Insufficiency Chronic Constipation Irritable Bowel Syndrome Acid Reflux Disorders Liver Disease
2013A by Therapeutic Area
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Further Diversifies Mylan’s Business
Geographic Profile
Mylan Today Mylan + Abbott Assets
Rest of Rest of World World 16% 19%
North Europe 48% America
24% 60%
33%
North Europe America
Product Profile
Mylan Today Mylan + Abbott Assets
Specialty /
Specialty OTC Branded Gx 15% 2% 31%
67% Generics 85% Generics
Adds attractive specialty/branded generics business and access to physician channel in Mylan’s largest non-U.S. markets
Provides entry into OTC market
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Mylan is Right Partner to Optimize this Asset
Mylan brings greater strategic focus, experience operating with speed and agility across different market types, and a more efficient global operating platform to this business
~$1.9 billion in run-rate revenues at transaction close through 2018
Expect flat revenue through 2018 through enhanced focus, operational excellence and powerful infrastructure
Expect approximately $600 million in adjusted annualized EBITDA, growing at mid- to high-single digits through 2018 by realizing operational efficiencies
Adjusted EBITDA margins expected to grow from low 30% range to ~40% through 2018
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Substantially Greater Cash Financial Flexibility
~$20B Cash Capital financial flexibility(1) allocation post acquisition $15B Cash financial flexibility(1)
M&A Incremental
pre acquisition
borrowings
Share repurchases Incremental borrowings Operating Debt Operating cash flow Repayment cash flow pre R&D pre R&D
R&D
CapEx
>30%
2014e-2018e(2) 2014e-2018e(2) 2014e-2018e(2)
Principles and priorities
Continue to acquire assets to complement our current platform
Return cash to stakeholders
Repay debt
Share repurchase
Continue to invest in complex products and bolstering operating platform
While maintaining investment-grade credit profile
Assuming a 4:1 gross debt/EBITDA ratio
Long-term targets beyond 2014 do not reflect company guidance
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Leveraging the One Mylan Platform
Potential to distribute portfolio across customer channels: Selling One Mylan around the world
Well positioned to manage this portfolio for the long-term through strength in both Rx and pharmacy
Expertise operating across market types and rapidly adapting to changing market conditions
Opportunity to leverage commercial best practices and operating platform
Expansive, global, vertically-integrated operating platform brings greater control over COGS, supply chain efficiencies
One Mylan
Driving Results Through Enhanced Critical Mass and Existing Operational Excellence
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Doubles Mylan’s Presence in its Largest
Non-U.S. Markets
Top Existing Pro Forma 2013A Sales Mylan Market vs. Standalone
Total Europe 1.8x
France 1.3x Italy 1.9x UK & Ireland 1.7x Spain 2.6x Germany 2.0x Benelux 1.4x Nordics 1.5x
Portugal 2.3x
Greece 4.8x
Switzerland/Austria 4.9x
All Central and Eastern 7.1x Europe
Canada 2.6x Japan 2.4x Australia/New Zealand 1.4x
Source: Abbott materials
Expected to approx. double Mylan’s revenues in Mylan’s next ten largest non-U.S. markets
Provides strong presence in the branded/generic marketplace in Central and Eastern Europe
Abbott Assets’ 2013A Sales
CEE
Japan 14% 19% Other Europe 11% UK / 13% Italy 4% Ireland Germany 5%
5% 12%
Australia / 7% Canada 10% New Spain France Zealand
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Enhances Commercial Platform and Creates
Critical Mass Across All Channels
Significantly enhances Mylan’s commercial platform and capabilities in key non-U.S. markets, particularly Europe
- Abbott assets bring an active sales organization in more than 40 markets
(~2,000 sales representatives and ~500 marketing employees) enhancing Mylan’s reach with physicians and patients
- Complements and expands presence in retail stores and pharmacies – key commercial outlets in Western and Central/Eastern Europe
Europe:
Abbott = ~1,300 Mylan = ~650
Canada:
Abbott = ~140 Mylan = ~40
Japan:
Abbott = ~560 Mylan/Pfizer
Australia / NZ:
Abbott = ~100 Mylan = ~65
Salesforce Presence in Selected Markets
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Creates Enhanced Commercial Platform to
Maximize Growth Drivers
Specialty/
EpiPen ® Respiratory Biologics Other Complex Auto-Injector Products
Increases potential to enhance performance of EpiPen® Auto-Injector
Strong commercial capabilities and specialty infrastructure expected to de-risk the launch of future complex products that require touch points across all sales channels, medical affairs efforts and marketing expertise (e.g. generic Advair®/Seretide, Combo, biologics)
Avoids the cost of future planned commercial build out to support growth drivers
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Transaction Overview
Terms
Approvals
Timing
Multiples
Mylan to acquire Abbott’s non-U.S. developed markets specialty and branded generics pharmaceutical business in an all-stock transaction
Abbott to receive 105 million New Mylan shares, implied $5.3 billion in value at announcement
Following close, Abbott to indirectly own ~21% of New Mylan
Combined company to be organized in the Netherlands
Transaction subject to Mylan shareholder approval and regulatory clearances
Expected closing in Q1 2015
$Million(1) Multiple
Revenue $1,900 2.8x
Adj. EBITDA $ 600 8.8x
(pre-operational efficiencies)
Adj. EBITDA $ 800 6.6x
(PF for $200 million operational efficiencies)
(1) Through 2018
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Transaction Structure
Abbott’s non-U.S. developed markets specialty
Abbott CARVE OUT Mylan Inc. and branded generics business
All-stock deal with Abbott to receive 105 million Mylan shares
Mylan N.V.
New public company organized in the Netherlands
Listed on NASDAQ as MYL
Led by current Mylan leadership team
Headquartered in Pittsburgh
Mylan Shareholders: Abbott: ~21%(1) ~79%(1)
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Pro Forma shares outstanding |
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Financially Compelling Transaction
Expect combined revenues of approximately $10 billion and $3 billion of EBITDA
Expected to be approximately $0.25 accretive in first full year and increasing thereafter through 2018
In excess of $200 million in pre-tax operational efficiencies by end of year three
- Driven by ability to maximize assets in Mylan’s operational infrastructure and strategic focus
Potential for significant revenue synergies
Expect to lower Mylan’s tax rate to approximately 20-21% in first full year and high teens thereafter
ROIC expected to exceed 10% in year one and expected to increase
Opportunity to accelerate target of at least $6.00 adjusted diluted EPS in 2018(1)
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Stated 2018 target; targets beyond 2014 do not reflect Company guidance |
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Substantial Financial Firepower for
Future Opportunities
Combined adjusted EBITDA of approximately $3 billion at transaction close
Significant cash flows
Strong balance sheet at ~2.3x leverage at transaction close
Highly leverageable infrastructure
More competitive global tax structure strengthens position and helps accelerate future growth
At close Mylan expects to have significant financial flexibility for future opportunities
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Proven Track Record
Successfully executed carve-out transactions including Merck Generics and Agila
Delivered acquisition synergies in excess of $350 million from Merck Generics transaction – well ahead of target
Fully integrated global operational platform post acquisitions of Matrix, Merck Generics and Agila
Repatriated manufacturing ~80% of product portfolio now produced internally
Adjusted diluted EPS growth
(2)
(1) For CY 2008, adjusted EPS was calculated using net income after the preferred dividend and with a denominator of approximately 304 million shares; 3Q 2008 and 4Q 2008 adjusted EPS were calculated using net income before the preferred dividend but with a denominator of 458 million shares, which assumed the conversion of preferred stock into 153 million shares (2) Stated 2018 target; long-term targets beyond 2014 do not reflect company guidance. (3) Growth rate based on 2013 actual adjusted EPS and 2014 guidance midpoint
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new standards in health care
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Mylan
Seeing is believing