Mylan Laboratories to acquire generics business of Merck KGaA

US-based Mylan Laboratories has agreed to acquire the generics business of Merck KGaA for Euro 4.9bn (US$6.7bn) in cash.

Merck Generics is a subsidiary of Merck KGaA, has sales in more than 90 countries and is the world's number three ranked generics business by 2006 calendar year revenues.

The acquisition will create a vertically and horizontally integrated generics and speciality pharmaceuticals company with 2006 pro forma revenues of approximately $4.2bn, EBITDA of approximately $1.0bn and approximately 10,000 employees, putting it among the top tier of global generic companies, with a significant presence in the top five global generics markets.

Mylan Laboratories is a leading pharmaceutical company with three principal subsidiaries: Mylan Pharmaceuticals; Mylan Technologies; and UDL Laboratories; it also has a controlling interest in Matrix Laboratories, of India. Mylan develops, licenses, manufactures, markets and distributes an extensive line of generic and proprietary products.

'Mylan's acquisition of Merck Generics would substantially complete the execution of one of its long-term visions: to create a world class global quality generics leader,' said Robert J. Coury, Mylan's vice chairman and ceo. 'Mylan is already a leader in the US, and through Matrix Laboratories controls one of the broadest API platforms in the world. Merck Generics provides us with leading positions in many of the world's other key regions. Together, we will form a powerful, diverse, robust and vertically integrated generics platform.'

Mylan expects to achieve synergies of approximately $250m by the end of year three. The majority of these synergies will result from vertical integration of Merck's API supply by leveraging the Matrix platform, aligning capabilities in research and development, and driving further efficiencies in increased manufacturing volumes of key products across the globe. Mylan does not anticipate significant reductions in headcount at Mylan, Matrix or Merck Generics.

The transaction remains subject to regulatory review and is expected to close in the second half of 2007.