Mylan to Buy Agila from Strides for $1.6B in Cash

Mylan Inc. (Nasdaq: MYL) todayannounced that it has signed a definitive agreement to acquire AgilaSpecialties Private Limited, a developer, manufacturer and marketer ofhigh-quality generic injectable products, from Strides Arcolab Limited (BSE:532531, NSE: STAR) for $1.6 billion in cash. The acquisition of Agila willcreate a global injectables leader, significantly expanding and strengtheningMylan's global injectables platform and providing Mylan entry into newhigh-growth geographic markets. The acquisition is expected to be immediatelyaccretive to Mylan's adjusted diluted earnings per share following closing.The transaction is expected to close in the fourth quarter of 2013, subject toregulatory approvals and certain closing conditions.Mylan CEO Heather Bresch commented, "The addition of Agila to our existinginjectables platform will immediately create a new, powerful global leader inthis fast-growing, attractive market segment and accelerate our target ofbecoming a top-three global player in injectables. Further, the acquisition ofthis unique asset delivers on several of Mylan's strategic growth drivers byfurther expanding and diversifying our product portfolio and geographic reach,strengthening our presence in the institutional channel, and positioning us tomaximize our generic biologics portfolio. Agila's broad product portfolio andpipeline, which is very complementary to Mylan's, is the result ofbest-in-class research and development and an industry-leading track record ofsecuring product approvals. Importantly, Agila will bring us one of the moststate-of-the-art, high quality injectables manufacturing platforms in theindustry. Our significantly expanded manufacturing capacity will allow us tovertically integrate our injectables platform and fast-track our ability topursue additional product opportunities and partnerships to facilitatelong-term growth. We are excited to welcome the Agila employees to our growingglobal team and anticipate a seamless and rapid integration of the Agilabusiness."Mylan President Rajiv Malik added, "By combining Agila's strong injectablescapabilities with Mylan's powerful global engine, we will catapult ourinjectables business to a new level. Agila will bring Mylan one of the deepestand broadest global injectables portfolios in the industry, and together wewill have more than 700 marketed injectables products and a global pipeline ofmore than 350 injectables products pending approval. In addition, Agila willfurther expand Mylan's geographic footprint, providing us with entry into keygrowth markets, such as Brazil, and position us to leverage our globalportfolio in these exciting markets, in line with our mission of providing theworld's 7 billion people access to high quality medicine."Mylan CFO John Sheehan said, "This is a financially and strategicallycompelling transaction, which is consistent with Mylan's stated acquisitionstrategy and financial commitments. We anticipate that the acquisition willimmediately enhance our revenue and earnings growth upon closing, and nearlydouble our business from injectables in the first full year. Further, thistransaction will significantly accelerate achievement of our $1 billion targetfor our institutional business. Following this transaction, we will maintainpro forma leverage well within our investment-grade parameters, providing uswith ample financial flexibility to execute on other opportunities toaccelerate our long-term growth targets and continue to maximize shareholdervalue. We remain committed to maintaining our investment-grade creditprofile."Commenting on the transaction, Arun Kumar, executive vice chairman and GroupCEO of Strides Arcolab said, "Our investments in the Agila business, togetherwith the operational excellence of our employees, have led to the creation aglobal, high-quality specialty injectables business with an industry-leadingpipeline and best-in-class infrastructure. We believe Agila, its partners,customers and employees across all of its markets will benefit significantlyfrom Mylan's global reach and strong position in the global generic andspecialty pharmaceutical sector. I am excited by the combination of our Agilabusiness with Mylan as it allows Mylan to leverage its operational base tobecome a leading global injectables company in the coming years and offersgreat opportunities to the employees who have made Agila what it is today.Mylan's long-standing commitment to quality, its track record of integrity andreliability, and powerful global platform make Mylan the perfect fit for thisbusiness, both culturally and from a commercial perspective."Agila, headquartered in Bangalore, India, will bring Mylan a broad productportfolio of more than 300 filings approved globally and marketed through anetwork covering 70 countries, including 61 abbreviated new drug applications(ANDAs) approved by the U.S. Food and Drug Administration (FDA). Agila has aglobal pipeline of approximately 350 filings pending approval, including 122ANDAs pending FDA approval. Agila's research and development and regulatorytrack record are reflected in its industry-leading number of approvals andfast approval timeframes. The company currently produces products across ninehigh-quality manufacturing facilities in India, Brazil and Poland, eight ofwhich have been approved by the FDA. Agila's manufacturing capabilitiesinclude vials, pre-filled syringes, ampoules, lyophilization, cytotoxics, andantibiotics. Agila's manufacturing base represents one of the largest sterilescapacity in India and one of the largest lyophilization capacities in theworld. In addition to its established presence in developed markets, Agila hasa strong position in high-growth emerging markets, including Brazil.Agila's capabilities complement Mylan's existing injectables platform of morethan 500 products marketed globally, including 55 ANDAs, and its high qualitysterile manufacturing facilities in Ireland and India.The global generic injectables market is expected to grow at a compound annualgrowth rate of 13%[1] from 2011-2017 driven by patent expiries, outpacing mostother dosage forms. The combined Mylan/Agila portfolio will representapproximately 70% of regulated market demand for injectables and the combinedR&D platform and manufacturing capabilities will position Mylan to be asignificant participant in advanced new technologies to drive future growth.Transaction TermsMylan will pay Strides Arcolab $1.6 billion in cash. The agreement alsoprovides for up to an additional $250 million in potential payments subject tothe satisfaction of certain conditions by Strides. Mylan is not assuming anyoutstanding debt or acquiring the business's cash as part of the transaction.Mylan has obtained a commitment letter from Morgan Stanley for a new $1billion senior unsecured bridge term loan in connection with the plannedacquisition. This bridge, together with internal sources, including availablecash and existing lines of credit, is expected to be sufficient to finance thetransaction. Mylan expects that its credit profile would not be materiallyaltered as a result of this transaction. The transaction has been unanimouslyapproved by Mylan's board of directors.