Some snakes can swallow animals that are much bigger than themselves, and apparently so can some generic drugmakers. Mylan Laboratories (NYSE: MYL) announced yesterday that it was buying German pharma Merck KGaA's much-larger generics drug business.
The $6.7 billion all-cash deal will more than double the size of Mylan, which has an under-$5 billion market capitalization. Merck's generics segment's $2.4 billion in 2006 sales is nearly double Mylan's 2006 fiscal year top-line results.
Mylan will pay for the deal by issuing up to $2 billion worth of stock and stock-related debt. In an industry where size does matter, this deal gives the new, combined Mylan much more weight in terms of top-line sales than its competitors like Barr Pharmaceuticals (NYSE: BRL) and Watson (NYSE: WPI).
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