Abbott pairs generics with tax benefit
Abbott and Mylan are going into business together. Abbott announced Monday that it was selling its branded generics business to Mylan, with two things to note: Mylan's rights are limited to developed markets—Europe, Japan, Canada, Australia and New Zealand—and the drugs flowing away from Abbott and towards Mylan will be housed in a brand-new publicly traded company.
The deal is the latest of a host of the pharmaceutical industry's tax-oriented strategies. Bloomberg notes that the new business will be headquartered in the Netherlands, which will drop Abbott's tax rate to less than 21% at the beginning and which will continue to fall.
Abbott says the businesses being handed to Mylan in the all-stock deal garnered around $2 billion in 2013 sales and that the branded generics it's hanging on to earned around $2.9 billion in sales last year.
Abbott and Mylan expect the deal will close in the first quarter of 2015. Abbott noted in its announcement that it doesn't expect to hang onto its Mylan shares for the long haul “and plans ultimately to redeploy the net proceeds from this transaction to opportunities that would be accretive to earnings over time.”