-=Mylan N.V. (MYL) to combine with Pfizer's (PFE) off-patent branded and generic established medicines business

• Hiving off the generics business is part of Pfizer’s ongoing effort to become leaner and more focused on finding new medicines. Pfizer recently shed its consumer health unit by creating a joint venture with GlaxoSmithKline that will eventually be spun off as a stand-alone company.
• Pfizer is meanwhile beefing up its research engine and innovative drug portfolio. In June, it agreed to pay $10.6 billion for Array BioPharma, a purchase that brought it two marketed oncology drugs, Braftovi and Mektovi. The deal also added a highly skilled, small-molecule-focused research team that has generated for its partners a pipeline of 17 drug candidates in preclinical or clinical studies. A month earlier, Pfizer added rare-disease-focused Therachon for $340 million.
• The merger ends a yearlong strategic review by Mylan, which has struggled with pricing pressure and scandals, including a federal price-fixing probe and lawsuits over its opioid sales. CEO Heather Bresch, who became a face of pharma greed during congressional hearings over the price of the EpiPen, will retire when the merger is complete. Upjohn president Michael Goettler will be the CEO of the merged firm.

Mylan N.V. confirms agreement to combine with Pfizer's (PFE) off-patent branded and generic established medicines business

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 new company is expected to have pro forma 2020 revenues of $19 to $20 billion. Pro forma 2020 adjusted EBITDA is anticipated to be in the range of $7.5 to $8.0 billion, including phased synergies of approximately $1 billion annually to be realized by 2023. Pro forma free cash flow for 2020 is expected to be more than $4 billion. The new company will be focused on returning capital to shareholders, while maintaining a solid investment grade credit rating. It expects to achieve a ratio of debt to adjusted EBITDA of 2.5x by the end of 2021. In addition, the new company intends to initiate a dividend of approximately 25% of free cash flow beginning the first full quarter after close and the potential for share repurchases once the debt to adjusted EBITDA target is sustained.
• The new company, which will be renamed and rebranded at close, will be led by Mylan's current Chairman Robert J. Coury, who will serve as Executive Chairman of the new company; Michael Goettler, current Group President, Upjohn, who will serve as Chief Executive Officer (CEO); and Rajiv Malik, current Mylan President, who will serve as President. Ken Parks, currently CFO of Mylan, has agreed to depart the company at closing. Heather Bresch, Mylan's current CEO, will retire from Mylan upon the close of this transaction.

The transaction is anticipated to close in mid-2020, subject to approval by Mylan shareholders and customary closing conditions, including receipt of regulatory approvals.

Mylan N.V. beats by $0.08, beats on revs; reaffirms FY19 EPS guidance, revs guidance

Reports Q2 (Jun) earnings of $1.03 per share, excluding non-recurring items, $0.08 better thanthe S&P Capital IQ Consensus of $0.95; revenues rose 1.5% year/year to $2.85 bln vs the $2.82 bln S&P Capital IQ Consensus.

Coreaffirms guidancefor FY19, sees EPS of $3.80-4.80 vs. $4.28 S&P Capital IQ Consensus; sees FY19 revs of $11.5-12.5 bln vs. $11.63 bln S&P Capital IQ Consensus.