Mylan eyeing acquisition targets, is confident 'inversion' will go through
August 8, 2014 12:00 AM
Mylan headquarters in Canonsburg, Pa.
By Patricia Sabatini / Pittsburgh Post-Gazette
Generic drug giant Mylan Inc. could do another acquisition even before the deal to buy a major chunk of Abbott Laboratories’ non-U.S. generic business is completed early next year, CEO Heather Bresch told analysts Thursday.
Ms. Bresch also said she doesn’t expect the Abbott deal — which includes a so-called inversion under which Cecil-based Mylan would reincorporate in the Netherlands to cut its corporate tax bill — to be derailed by Congress.
“We are continuing to move forward” with the Abbott acquisition, she said in a conference call discussing second-quarter financial results. “We feel solid about our transaction.”
Inversions have become increasingly popular for U.S. companies, but the maneuver has raised the ire of some legislators and the president, who view it as a tax dodge that costs the federal government billions in revenue.
“As much as the Senate may want to vote on something to take it back into the field and be able to say to their constituencies that they are trying to do something [to stop inversions], I just continue to think the odds of anything getting done and looking at one little snapshot of our tax code, which needs significantly reformed, is unlikely,” said Ms. Bresch, daughter of U.S. Sen. Joe Manchin, D-W.Va.
She said opposition to inversions included “a lot of noise” and “uneducated dialogue.”
“The facts have really been sheltered,” she said.
On Wednesday, another major U.S. company that had been considering an inversion — Walgreens — announced it had decided against the move. The board of the nation’s biggest drug store chain said it wasn’t confident the company could come up with a structure that would pass Internal Revenue Service scrutiny. Public reaction to the move also was a factor in the decision, the company said.
At Mylan, Ms. Bresch said the drug maker, which agreed last month to pay some $5 billion in stock for the Abbott business, was actively pursuing other deals.
“There’s a lot of opportunities out there and we are looking at everything,” she said. “There’s nothing precluding us from announcing or closing a deal prior to the Abbott closing.”
Her remarks came as Mylan reported that second-quarter profits skidded 30 percent to $125.2 million, or 32 cents per share, down from $177.7 million, or 46 cents, in the same period last year.
Although revenue increased 8 percent to $1.84 billion, expenses rose as well.
The company lowered its earnings and revenue forecasts for all of 2014, citing delays in regulatory approvals for key products. Mylan now expects per-share profits of between $3.25 and $3.45, down from a range of $3.25 to $3.60. It projects revenue of $7.8 billion to $8 billion compared with the previous estimate of $7.8 billion to $8.2 billion.
Mylan also said it was postponing an investor day conference with analysts scheduled for next month because management was busy with the Abbott deal and “additional strategic opportunities.”
The Abbott transaction, which Mylan has said would bring it an estimated $1.9 billion in revenue and a portfolio of about 100 specialty and branded generic drugs, is expected to be completed in the first quarter of 2015.
Shares skidded $1.43, or 3 percent, Thursday to close at $46.49.
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