Drug giant Abbott sitting pretty with $7bn Mylan stake
Published 24/04/2015 | 02:30
Selling its generic drug unit to Mylan NV this year may be the most profitable thing Abbott Laboratories ever did with the business.
By selling its established-markets drug unit for about 110 million Mylan shares in February, Abbott became Mylan's biggest stockholder.
The stake that was worth about $5bn (€4.6bn) at the time but is now valued at "well north of $7bn," according to Abbott chief executive Miles White, after Teva Pharmaceutical Industries Ltd offered to buy Mylan this month.
"I am watching the great theatre out there that is surrounding Mylan," Mr White told investors this week. "I'm happy that we've been patient. It is clearly accruing value to us."
Since speculation about a Teva bid for Mylan began in March, Mylan's stock has gained more than 30pc. In a formal offer this week, Teva said it would pay $40.1bn (€37bn), or $82 (€76) a share, in cash and stock to take over Mylan. If Teva raises its price, Abbott's stake will be worth even more.
Mylan, meanwhile, has proposed buying Dublin-based Perrigo for $28.9bn (€26.8bn), a move that could immediately add to the company's bottom line if it finances the deal well, according to data compiled by Bloomberg.
While Abbott sold about one-third of the 110 million Mylan shares it received when the deal closed in February, the rest are staying put, Mr White said.
"I don't feel constrained at all by the form of our capital, whether it's in Mylan stock or cash or anything else," Mr White said.
"If I put it into cash, I can tell you right now, I can't earn as much on it as I'm earning leaving it in Mylan," he said. "Until I need to sell it, I think it's in a nice place."