Mylan Laboratories to Acquire Generics Business of Merck KGaA

- Combination Creates a World Class Global Generics Leader -

- Significant Scale and Breadth Will Drive Major Operating Efficiencies;
- Highly Complementary Transaction Further Strengthens Mylan's Product Portfolio;
- Accelerates Mylan's Revenue and Earnings Growth;
- Anticipated to be Cash EPS(1) Neutral in 2nd Full Year -

PITTSBURGH, May 12 /PRNewswire-FirstCall/ -- Mylan Laboratories Inc. (NYSE: MYL) and Merck KGaA today announced the signing of a definitive agreement under which Mylan will acquire Merck's generics business ("Merck Generics") for EUR 4.9 billion ($6.7 billion) in an all-cash transaction. The combination of Mylan and Merck Generics will create a vertically and horizontally integrated generics and specialty pharmaceuticals leader with a diversified revenue base and a global footprint. On a pro forma basis, for calendar 2006, the combined company would have had revenues of approximately $4.2 billion, EBITDA of approximately $1.0 billion and approximately 10,000 employees, immediately making it among the top tier of global generic companies, with a significant presence in all of the top five global generics markets.

In addition to retaining Hank Klakurka, currently President and CEO of Merck Generics, Mylan has executed long-term employment agreements with members of Merck Generics' senior management team, ensuring that senior leadership remains intact. Mylan views the existing management and employees of Merck Generics as key to the success of the combined company.

Robert J. Coury, Mylan's Vice Chairman and Chief Executive Officer, commented: "Mylan's acquisition of Merck Generics would substantially complete the execution on one of its long-term visions: to create a world class global quality generics leader. The fit between our two companies is truly outstanding. Mylan is already a leader in the U.S., the world's largest market, and through Matrix Laboratories controls one of the broadest API platforms in the world. Merck Generics provides us with leading positions in many of the world's other key regions. Together, we will form a powerful, diverse, robust and vertically integrated generics platform.

(1) Cash EPS represents EPS adjusted for amortization expense related to intangible assets.The combination with Merck Generics will significantly extend our range of therapeutic categories and dosage forms, and bring us a number of new, differentiated products and successful franchises."

Merck Generics is a subsidiary of Merck KGaA, a more than 300-year old global chemical and pharmaceutical conglomerate. Merck Generics has sales in more than 90 countries and is the world's number three ranked generics business by 2006 calendar year revenues. It has more than 400 high quality products and 70% of its revenues are generated from countries where it is a top three player. Merck Generics' U.S. specialty pharmaceuticals business, Dey, is focused on respiratory and allergy products and had $650 million in revenues in 2006. Merck Generics reported sales of EUR 1.8 billion ($2.45 billion) and EBITDA of EUR 335 million ($450 million) in 2006. The business employs approximately 5,000 people worldwide.

Hank Klakurka, President and CEO of Merck Generics, said: "My management team and I are extremely excited to be joining the Mylan team. We believe Mylan is the best possible acquirer for our company. The two businesses are an excellent fit in terms of geography and product mix, and together we can offer extremely attractive product baskets across our combined territories. Mylan has established itself as a leader in the U.S. in terms of quality, manufacturing excellence and customer service, and has demonstrated a strong commitment to its employees and the communities in which it operates. My team and I look forward to working with Mylan to build an undisputed world leader in quality generics."

Source : Equity Bulls

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