I like the ABT-MYL deal from ABT’s standpoint insofar as >100% of the growth in ABT’s branded-generics business comes from emerging markets rather than from developed* markets. (I.e. ABT’s branded-generics business in developed markets has negative growth.)
As ABT’s PR states, in due course ABT intends to sell the 105M shares of MYL acquired in today’s transaction and deploy the proceeds for general corporate purposes such as M&A and increased share buybacks.
What ABT will likely continue to do is to bulk up in branded generics for emerging markets by doing more deals such as the ones with CFR in Latin America (#msg-102107675) and with Verophram in Russia (#msg-103616483).
All told, these transactions make ABT an even more compelling investment to capitalize on The Global Demographic Tailwind (#msg-104130001).
*Europe, Japan, Canada, Australia, New Zealand. (ABT does not sell branded generics in the US market.)
MYL-ABT ‘spinversion’ remains on track for closing in 1Q15. The deal terms were modified slightly, but not because of changes in the tax code; rather, the modification is that ABT will perform certain manufacturing for MYL in return for an additional 5M shares of MYL (i.e. 110M shares instead of 105M as in the original deal):
As an ABT shareholder, I’m elated that the deal is going through because it allows ABT to unload its worst-performing asset—the branded-generics business in Europe, Canada, and Australia—while ABT retains the braded-generics business in emerging markets, where it is highly profitable and growing at a double-digit annual rate.
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