Mylan to buy Merck Generic unit for $6.6 bln

Mylan Laboratories Inc. has agreed to the purchase of Merck KGaA's generic-drug unit, the German Drug maker announced Sunday. The former will pay 4.9 billion euros ($6.6 billion) in cash to become the third-largest maker of copied medicines in the world.

The two companies have signed a share purchase agreement whereby Mylan will buy all Merck Generics companies throughout the world, said Merck adding that it expects the deal, subject to regulatory consent to close in the second half of the year.

With finality of the deal, Darmstadt-based Merck will get to substantially concentrate on its core pharmaceutical and chemical activities, at the same time Mylan, a Canonsburg, Pennsylvania based generic drug maker, will be able to spread out its global reach.

"The sale will allow Merck to focus its resources on further growth within its pharmaceuticals and chemicals business sectors," said CEO, Karl-Ludwig Kley.

Mylan, which has arranged funding from Merrill Lynch & Co., Citigroup Inc. and Goldman Sachs Group, Inc., said the acquisition will produce a company with strength of 10,000 employees.

According to Merck, the unit had sales of $2.4 billion and an operating profit of more than $500 million in 2006.

"The fit between our two companies is truly outstanding," said Robert J. Coury, Mylan's vice chairman and CEO. “The Merck unit provides us with leading positions in many of the world's other key regions" to add to Mylan's strong position in the U.S. market.”

Mylan, of late, bought 71 percent of India-based drug ingredient maker Matrix Laboratories for a little over $700 million.

Mylan's offer values the Merck unit at 14.6 times 2006 earnings before interest, tax and the price it is paying surpasses its own market value of $5.4 billion.