Mylan increases Abbott's ownership stake in pending deal

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Paul J. Gough

Mylan Inc.'s new headquarters at Southpointe, Cecil Township, PA. Photographed May 24, 2014.

Patty Tascarella

Senior Reporter- Pittsburgh Business Times

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Mylan Inc. said it expects its controversial $5.3 billion deal to acquire Abbott Laboratories' generic European operations and merge, creating a new holding company in the tax-friendlier Netherlands, to close in first quarter 2015.

The Pittsburgh-area generic pharmaceuticals business has increased the number of shares in the new company that will be issued to Abbott affiliates to 110 million, according to a filing with the U.S. Securities and Exchange Commission. As a result, former Mylan shareholders will own about 78 percent of the outstanding New Mylan shares, and Abbott will own about 22 percent when the deal closes.

Mylan (Nasdaq:MYL), based in Southpointe, announced the transaction in July. Deals in which a U.S. company merges with a foreign entity and creates a holding company in a country with more favorable tax rates are known as inversions and have been under fire by the public, legislature and regulators because of lost tax revenue.

The new filing shows a tweak to the original arrangement. Initially, Mylan was to own 79 percent, Abbott 21 percent. Mylan's executive team will still run the company from Southpointe. But with its corporate parent based in the Netherlands, Mylan's tax rate will steadily decrease, dropping to 21 percent during the first full year after the deal is completed and then into the teens within three to five years.

"Under the transaction agreement, affiliates of New Mylan and Abbott agreed to enter into certain manufacturing arrangements at the closing of the transaction," the filing said. "The amendment adjusts, in a manner that is more favorable to New Mylan and its affiliates, the pricing terms under the arrangements pursuant to which, after closing, affiliates of Abbott will manufacture and supply products for affiliates of New Mylan."

Mylan shares closed at $52.04 Tuesday, up 3.45 percent.

Patty Tascarella covers accounting, banking, finance, legal, marketing and advertising and foundations. Contact her at ptascarella@bizjournals.com or 412-208-3832. .