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Mylan Gets a Shot in the Arm with Pfizer Merger Deal

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EpiPen manufacturer Mylan N.V. announced that the company will merge with Pfizer Inc.'s Upjohn Division, which holds Pfizer's off-patent branded and generic drugs, forming a new company.

Mylan Inc. (MYL:NASDAQ) and Pfizer Inc. (PFE:NYSE) today announced a definitive agreement to combine Mylan with Upjohn, Pfizer's off-patent branded and generic established medicines business, creating a new global pharmaceutical company.

The report noted, "Under the terms of the agreement, which is structured as an all-stock, Reverse Morris Trust transaction, each Mylan share would be converted into one share of the new company. Pfizer shareholders would own 57% of the combined new company, and Mylan shareholders would own 43%. The Boards of Directors of both Mylan and Pfizer have unanimously approved the transaction."

"The combination will be effected through a Reverse Morris Trust, under which Upjohn is expected to be spun off or split off to Pfizer's shareholders and simultaneously combined with Mylan," the release noted.

Plans for the merger have sent Mylan shares up more than 14% on the day. Mylan and Pfizer also issued second quarter earnings reports and Mylan further announced the retirement of CEO Heather Bresch effective upon the close of the above transaction in mid-2020.

In its quarterly earnings report Mylan announced total revenues for the three months ended June 30, 2019, were $2.85 billion, compared to $2.81 billion for the comparable prior year period, representing an increase of $43.2 million, or 2%. It further reported a U.S. GAAP diluted loss per ordinary share of ($0.33) as compared to earnings of $0.07 per ordinary share in the prior year period and adjusted diluted EPS of $1.03, as compared to $1.07 in the prior year period.

In a separate release, Mylan's Board of Directors announced the retirement of CEO Heather Bresch, which will be effective upon the closing of the combination of Mylan and Upjohn, a division of Pfizer. The transaction is anticipated to close in mid-2020, subject to customary closing conditions, including receipt of regulatory approvals, and approval by Mylan shareholders. Board Chairman Robert J. Coury commented, "On behalf of Mylan's Board of Directors, I extend my gratitude and respect for Heather Bresch's years of extraordinary and passionate leadership at Mylan, which helped to pave the way for today's historic announcement regarding the combination of Mylan and Upjohn." He further pointed out that Bresch was named the first female CEO of a Fortune 500 global pharmaceutical company.

On a busy news day for both companies, Pfizer also posted second quarter earnings reporting Q2/19 revenues of $13.3 billion, reflecting 2% operational growth driven by 6% operational growth from Pfizer Biopharmaceuticals Group and Q2/19 reported diluted EPS of $0.89, and adjusted diluted EPS of $0.80.

Mylan N.V. is a global pharmaceutical company that develops, licenses, manufactures, markets and distributes generic, brand name and over-the-counter products in a range of dosage forms and therapeutic categories. Mylan is a maker of Epinephrine Auto-Injectors (EpiPens), which are used for the emergency treatment of life-threatening allergic reactions (anaphylaxis) caused by allergens, exercise or unknown triggers; and for people who are at increased risk for these reactions.

Pfizer is a research-based global biopharmaceutical company engaged in the discovery, development and manufacture of healthcare products. Its global portfolio is composed of many household name brand prescription medications including Prevnar 13, Xeljanz, Eliquis, Lipitor, Celebrex, Pristiq and Viagra.

On the news, Mylan shares opened up higher today at $20.95 (+2.49, +13.49%) and are currently trading at $21.01/share. Pfizer shares opened down slightly at $42.17 (-$0.92, -2.14%) and have traded between $41.75 to $43.00 today.

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