If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General
Instruction G, check the following box
¨
If this Form is filed to register additional securities
for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering
¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering
¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION FOR MEDA
The following table sets forth the selected historical consolidated financial and operating data of Meda as of and for each of the years in the
five-year period ended December 31, 2015. The selected historical financial information as of and for the years ended December 31, 2015, 2014, 2013, 2012 and 2011 has been derived from Medas audited consolidated financial statements.
The derivation of the selected historical financial information as of and for the years ended December 31, 2012 and 2011 reflects the changes discussed in the footnotes below. The information set forth below is only a summary that you should
read together with the audited consolidated financial statements of Meda and the related notes as of and for the years ended December 31, 2015, 2014 and 2013 beginning on page F-1 of this prospectus. The historical financial information of Meda
included in this prospectus has been prepared in accordance with IFRS as issued by the IASB with all amounts presented in Swedish kronor. IFRS as issued by the IASB differs in certain material respects from U.S. GAAP.
The selected historical financial information may not be indicative of the future performance of Meda. For more information, see the audited consolidated
financial statements of Meda and the related notes beginning on page F-1 of this prospectus and Where You Can Find More Information beginning on page 162 of this prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated income statement
|
|
Years ended
|
|
SEK Million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
(1)
|
|
|
2011
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Net sales
|
|
|
19,648
|
|
|
|
15,352
|
|
|
|
13,114
|
|
|
|
12,991
|
|
|
|
12,856
|
|
Cost of sales
|
|
|
7,525
|
|
|
|
6,083
|
|
|
|
5,087
|
|
|
|
5,041
|
|
|
|
4,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
12,123
|
|
|
|
9,269
|
|
|
|
8,027
|
|
|
|
7,950
|
|
|
|
8,199
|
|
Other income
|
|
|
22
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
|
4,359
|
|
|
|
3,718
|
|
|
|
2,993
|
|
|
|
2,867
|
|
|
|
2449
|
|
Medicine and business development expenses
|
|
|
4,086
|
|
|
|
3,223
|
|
|
|
2,794
|
|
|
|
2,609
|
|
|
|
2468
|
|
Administrative expenses
|
|
|
981
|
|
|
|
883
|
|
|
|
692
|
|
|
|
673
|
|
|
|
618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
2,719
|
|
|
|
1,487
|
|
|
|
1,548
|
|
|
|
1,801
|
|
|
|
2,664
|
|
Finance income
|
|
|
37
|
|
|
|
8
|
|
|
|
22
|
|
|
|
61
|
|
|
|
52
|
|
Finance costs
|
|
|
1,452
|
|
|
|
913
|
|
|
|
567
|
|
|
|
626
|
|
|
|
676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after financial items
|
|
|
1,304
|
|
|
|
582
|
|
|
|
1,003
|
|
|
|
1,236
|
|
|
|
2,040
|
|
Tax
|
|
|
112
|
|
|
|
180
|
|
|
|
198
|
|
|
|
61
|
|
|
|
432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,192
|
|
|
|
402
|
|
|
|
805
|
|
|
|
1,175
|
|
|
|
1,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent company shareholders
|
|
|
1,176
|
|
|
|
399
|
|
|
|
807
|
|
|
|
1,204
|
|
|
|
1,616
|
|
Noncontrolling interests
|
|
|
16
|
|
|
|
3
|
|
|
|
2
|
|
|
|
29
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,192
|
|
|
|
402
|
|
|
|
805
|
|
|
|
1,175
|
|
|
|
1,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic, SEK
|
|
|
3.22
|
|
|
|
1.23
|
|
|
|
2.57
|
|
|
|
3.83
|
1)
|
|
|
5.16
|
(1)
|
Diluted, SEK
|
|
|
3.22
|
|
|
|
1.23
|
|
|
|
2.57
|
|
|
|
3.83
|
1)
|
|
|
5.16
|
(1)
|
Average number of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (thousands)
|
|
|
365,467
|
|
|
|
323,397
|
|
|
|
313,672
|
|
|
|
313,672
|
|
|
|
313,672
|
|
Diluted (thousands)
|
|
|
365,467
|
|
|
|
323,397
|
|
|
|
313,672
|
|
|
|
313,672
|
|
|
|
313,672
|
|
Number of shares at year-end
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (thousands)
|
|
|
365,467
|
|
|
|
365,467
|
|
|
|
313,672
|
|
|
|
313,672
|
|
|
|
313,672
|
|
Diluted (thousands)
|
|
|
365,467
|
|
|
|
365,467
|
|
|
|
313,672
|
|
|
|
313,672
|
|
|
|
313,672
|
|
Dividend per share (SEK)
|
|
|
2.50
|
|
|
|
2.50
|
|
|
|
2.41
|
|
|
|
2.17
|
(1)
|
|
|
2.17
|
(1)
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated balance sheet
|
|
December 31
|
|
SEK Million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
(1)
|
|
|
2011
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible assets
|
|
|
1,504
|
|
|
|
1,692
|
|
|
|
848
|
|
|
|
795
|
|
|
|
811
|
|
Intangible assets
|
|
|
47,478
|
|
|
|
50,798
|
|
|
|
29,666
|
|
|
|
30,419
|
|
|
|
32,306
|
|
Derivatives
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
Deferred tax assets
|
|
|
1,812
|
|
|
|
1,640
|
|
|
|
918
|
|
|
|
931
|
|
|
|
693
|
|
Available-for-sale financial assets
|
|
|
23
|
|
|
|
45
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
Other non-current receivables
|
|
|
262
|
|
|
|
305
|
|
|
|
13
|
|
|
|
10
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
51,079
|
|
|
|
54,505
|
|
|
|
31,450
|
|
|
|
32,160
|
|
|
|
33,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
2,876
|
|
|
|
2,988
|
|
|
|
1,982
|
|
|
|
1,931
|
|
|
|
1,780
|
|
Trade receivables
|
|
|
4,295
|
|
|
|
4,151
|
|
|
|
2,151
|
|
|
|
1,929
|
|
|
|
1,944
|
|
Other receivables
|
|
|
320
|
|
|
|
480
|
|
|
|
196
|
|
|
|
199
|
|
|
|
154
|
|
Tax assets
|
|
|
225
|
|
|
|
203
|
|
|
|
106
|
|
|
|
117
|
|
|
|
151
|
|
Prepayments and accrued income
|
|
|
290
|
|
|
|
266
|
|
|
|
181
|
|
|
|
181
|
|
|
|
320
|
|
Derivatives
|
|
|
149
|
|
|
|
208
|
|
|
|
49
|
|
|
|
60
|
|
|
|
520
|
|
Cash and cash equivalents
|
|
|
1,612
|
|
|
|
2,311
|
|
|
|
178
|
|
|
|
194
|
|
|
|
140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
9,767
|
|
|
|
10,607
|
|
|
|
4,843
|
|
|
|
4,611
|
|
|
|
5,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
60,846
|
|
|
|
65,112
|
|
|
|
36,293
|
|
|
|
36,771
|
|
|
|
38,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
365
|
|
|
|
365
|
|
|
|
302
|
|
|
|
302
|
|
|
|
302
|
|
Other capital contributions
|
|
|
13,788
|
|
|
|
13,788
|
|
|
|
8,865
|
|
|
|
8,865
|
|
|
|
8,865
|
|
Other reserves
|
|
|
375
|
|
|
|
401
|
|
|
|
415
|
|
|
|
776
|
|
|
|
239
|
|
Retained earnings including profit for the year
|
|
|
6,431
|
|
|
|
6,142
|
|
|
|
6,491
|
|
|
|
6,364
|
|
|
|
5,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,959
|
|
|
|
20,696
|
|
|
|
15,243
|
|
|
|
14,755
|
|
|
|
14,768
|
|
Non controlling interests
|
|
|
3
|
|
|
|
16
|
|
|
|
32
|
|
|
|
32
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
20,956
|
|
|
|
20,680
|
|
|
|
15,211
|
|
|
|
14,723
|
|
|
|
14,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
22,507
|
|
|
|
26,817
|
|
|
|
7,792
|
|
|
|
13,195
|
|
|
|
14,913
|
|
Derivatives
|
|
|
19
|
|
|
|
22
|
|
|
|
33
|
|
|
|
50
|
|
|
|
29
|
|
Deferred tax liabilities
|
|
|
4,708
|
|
|
|
5,278
|
|
|
|
2,211
|
|
|
|
2,537
|
|
|
|
2,735
|
|
Pension obligations
|
|
|
2,273
|
|
|
|
2,430
|
|
|
|
1,107
|
|
|
|
1,284
|
|
|
|
1,110
|
|
Other non-current liabilities
|
|
|
2,474
|
|
|
|
2,464
|
|
|
|
32
|
|
|
|
35
|
|
|
|
35
|
|
Other provisions
|
|
|
337
|
|
|
|
375
|
|
|
|
209
|
|
|
|
220
|
|
|
|
226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
32,318
|
|
|
|
37,386
|
|
|
|
11,384
|
|
|
|
17,321
|
|
|
|
19,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
1,696
|
|
|
|
1,542
|
|
|
|
883
|
|
|
|
900
|
|
|
|
878
|
|
Current tax liabilities
|
|
|
515
|
|
|
|
483
|
|
|
|
464
|
|
|
|
431
|
|
|
|
373
|
|
Other liabilities
|
|
|
240
|
|
|
|
495
|
|
|
|
195
|
|
|
|
167
|
|
|
|
187
|
|
Accruals and deferred income
|
|
|
1,553
|
|
|
|
1,731
|
|
|
|
1,343
|
|
|
|
1,103
|
|
|
|
1,162
|
|
Derivatives
|
|
|
205
|
|
|
|
284
|
|
|
|
113
|
|
|
|
28
|
|
|
|
257
|
|
Borrowings
|
|
|
2,355
|
|
|
|
1,391
|
|
|
|
6,304
|
|
|
|
1,752
|
|
|
|
1,802
|
|
Other provisions
|
|
|
1,008
|
|
|
|
1,120
|
|
|
|
396
|
|
|
|
346
|
|
|
|
374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
7,572
|
|
|
|
7,046
|
|
|
|
9,698
|
|
|
|
4,727
|
|
|
|
5,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
39,890
|
|
|
|
44,432
|
|
|
|
21,082
|
|
|
|
22,048
|
|
|
|
24,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities
|
|
|
60,846
|
|
|
|
65,112
|
|
|
|
36,293
|
|
|
|
36,771
|
|
|
|
38,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
(1)
|
The consolidated income statement and consolidated balance sheet figures for 2012 and 2011 have been restated from those previously published to retrospectively apply IAS 19 Employee Benefits Revised (IAS 19R), which
Meda adopted in 2013. The restatements relate to recognition of unrecognized actuarial gains and losses in equity, as well as related adjustments of pension obligations, other provisions and deferred tax assets and liabilities. Furthermore, earnings
per share and dividend per share for 2012 and 2011 have also been restated from those previously published due to the bonus issue element in the rights issue in 2014.
|
Exchange Rate Information
The following table shows, for the periods indicated, information concerning the exchange rate between SEK and USD. The information in the
following table is expressed in SEK per USD and is based on the FRBNY Exchange Rate.
On March 31, 2016, the exchange rate was SEK
8.0962 per $1.00. These translations should not be construed as a representation that the SEK amounts actually represent, or could be converted into, USD at the rates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-end
Rate
(1)
|
|
|
Average
Rate
(2)
|
|
|
High
(3)
|
|
|
Low
(3)
|
|
Recent Monthly Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 2016
|
|
|
8.0962
|
|
|
|
8.3393
|
|
|
|
8.6321
|
|
|
|
8.0962
|
|
February 2016
|
|
|
8.5709
|
|
|
|
8.4804
|
|
|
|
8.5749
|
|
|
|
8.3440
|
|
January 2016
|
|
|
8.5709
|
|
|
|
8.5483
|
|
|
|
8.6024
|
|
|
|
8.5048
|
|
December 2015
|
|
|
8.4485
|
|
|
|
8.4938
|
|
|
|
8.7069
|
|
|
|
8.3622
|
|
November 2015
|
|
|
8.7206
|
|
|
|
8.6829
|
|
|
|
8.7633
|
|
|
|
8.5079
|
|
October 2015
|
|
|
8.4922
|
|
|
|
8.3314
|
|
|
|
8.5536
|
|
|
|
8.1333
|
|
Annual Data (Year ended December 31)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
8.4485
|
|
|
|
8.4643
|
|
|
|
8.8180
|
|
|
|
7.8847
|
|
2014
|
|
|
7.8245
|
|
|
|
6.9223
|
|
|
|
7.8245
|
|
|
|
6.3394
|
|
2013
|
|
|
6.4254
|
|
|
|
6.5152
|
|
|
|
6.8171
|
|
|
|
6.2880
|
|
2012
|
|
|
6.5074
|
|
|
|
6.7247
|
|
|
|
7.2655
|
|
|
|
6.5018
|
|
2011
|
|
|
6.8737
|
|
|
|
6.4263
|
|
|
|
7.0054
|
|
|
|
5.9968
|
|
(1)
|
The period-end rate is equal to the FRBNY Exchange Rate on the last business day of the applicable period.
|
(2)
|
The average rates for the six most recent months were calculated by taking the simple average of the FRBNY Exchange Rate on each business day during the applicable month. The average rates for the five most recent years
were calculated by taking the simple average of the FRBNY Exchange Rate on the last business day of each month during the applicable year.
|
(3)
|
The high and low rates for each period are equal to the high and low FRBNY Exchange Rates during the applicable period.
|
15
SELECTED UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following selected unaudited pro forma financial information gives effect to the acquisition of the EPD Business and the proposed acquisition of Meda
pursuant to the Offer, both of which are accounted for under the acquisition method of accounting in accordance with
ASC 805, Business Combinations
, with Mylan as the acquirer. The consolidated financial statements of Mylan and the EPD
Business are prepared in accordance with U.S. GAAP with all amounts stated in U.S. Dollars. The consolidated financial statements of Meda are prepared in accordance with IFRS as issued by the IASB with all amounts presented in Swedish kronor. The
selected unaudited pro forma financial information has been prepared in accordance with U.S. GAAP. The selected unaudited pro forma condensed combined balance sheet as of December 31, 2015 is based on the audited consolidated balance sheet of
Mylan as of December 31, 2015 and the audited consolidated balance sheet of Meda as of December 31, 2015, converted to U.S. GAAP and U.S. Dollars and conformed to Mylans presentation, and has been prepared to reflect the proposed
acquisition of Meda as if it had occurred on December 31, 2015. The selected unaudited pro forma condensed combined statement of operations for the year ended December 31, 2015 is based on the audited consolidated statement of operations
of Mylan for the year ended December 31, 2015, the audited consolidated income statement of Meda for the year ended December 31, 2015, converted to U.S. GAAP and U.S. Dollars and conformed to Mylans presentation, and the unaudited
EPD Business combined results of operations for the period from January 1, 2015 to February 27, 2015, the acquisition date of the EPD Business, and has been prepared to reflect the acquisition of the EPD Business and the proposed
acquisition of Meda as if each had occurred on January 1, 2015. The selected unaudited pro forma financial information reflects only pro forma adjustments that are factually supportable and directly attributable to the acquisition of the EPD
Business and the proposed acquisition of Meda and, with respect to the selected unaudited pro forma condensed combined statement of operations, expected to have a continuing impact on the results of the Combined Company.
The selected unaudited pro forma financial information has been derived from and should be read in conjunction with the more detailed unaudited pro forma
financial information appearing elsewhere in this prospectus and the related notes thereto. In addition, the unaudited pro forma financial information was based on, and should be read in conjunction with, the consolidated financial statements of
Mylan for the year ended December 31, 2015 and the related notes thereto incorporated by reference into this prospectus and the consolidated financial statements of Meda for the year ended December 31, 2015 and the related notes thereto
included in this prospectus beginning on page F-1. See Where You Can Find More Information beginning on page 162 of this prospectus.
The
selected unaudited pro forma financial information is for illustrative purposes only. It does not purport to indicate the results that would have actually been attained had the acquisition of the EPD Business and the proposed acquisition of Meda
been completed on the assumed dates or for the periods presented, or which may be realized in the future. To produce the unaudited pro forma financial information, Mylan allocated the estimated purchase price for Meda using its best estimates of
fair value. Such estimates are preliminary and subject to further adjustments, which could be material. To the extent there are significant changes to the Meda business, the assumptions and estimates herein could change significantly.
The selected unaudited pro forma financial information has been prepared assuming that 100 percent of the outstanding Meda shares will be tendered into the
Offer.
16
Selected Unaudited Pro Forma Condensed Combined Balance Sheet
(in millions)
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
(Pro forma combined)
|
|
Total assets
|
|
$
|
35,186.1
|
|
Long-term debt, including current portion
|
|
|
16,157.3
|
|
Total liabilities
|
|
|
24,427.6
|
|
Total equity
|
|
|
10,758.5
|
|
Selected Unaudited Pro Forma Condensed Combined Statement of Operations
(in millions, except per share amounts)
|
|
|
|
|
|
|
Year Ended
December 31, 2015
|
|
|
|
(Pro forma combined)
|
|
Total revenues
|
|
$
|
11,930.0
|
|
Net earnings attributable to Mylan N.V. ordinary shareholders
|
|
|
780.9
|
|
Earnings per ordinary share attributable to Mylan N.V. ordinary shareholders:
|
|
|
|
|
Basic
|
|
$
|
1.51
|
|
Diluted
|
|
$
|
1.44
|
|
Weighted average ordinary shares outstanding:
|
|
|
|
|
Basic
|
|
|
518.7
|
|
Diluted
|
|
|
543.9
|
|
17
HISTORICAL AND UNAUDITED PRO FORMA PER SHARE INFORMATION
The historical per share earnings, dividends and book value of Mylan and Meda shown in the tables below are derived from (a) with respect to
Mylan, its audited consolidated financial statements for the year ended December 31, 2015 and (b) with respect to Meda, its audited consolidated financial statements for the year ended December 31, 2015. The unaudited combined company
pro forma information below includes Meda information converted to U.S. GAAP and U.S. Dollars and conformed to Mylans presentation. The historical financial information of Meda presented below has been converted to U.S. Dollars. The unaudited
pro forma comparative basic and diluted earnings per share data gives effect to the acquisition of the EPD Business and the proposed acquisition of Meda using the acquisition method of accounting in accordance with
ASC 805, Business
Combinations
, as if each of the acquisition of the EPD Business and the proposed acquisition of Meda had been completed on January 1, 2015. The unaudited pro forma book value per share information was computed as if the proposed acquisition
of Meda had been completed on December 31, 2015. You should read this information in conjunction with the historical financial information of Mylan and Meda incorporated by reference or included in this prospectus, including Mylan and
Medas respective audited consolidated financial statements and related notes. The combined company pro forma earnings per share was calculated in the section entitled Selected Unaudited Pro Forma Financial Information beginning on
page 16. Equivalent pro forma per share amounts were calculated by multiplying the pro forma combined per share amounts by 0.386, the assumed equity exchange ratio in connection with the Offer, multiplied by 20 percent.
The unaudited pro forma data shown in the tables below is for illustrative purposes only. You should not rely on this data as being indicative of the
historical results that would have been achieved had Mylan and Meda always been combined or the future results that the Combined Company will achieve after the completion of the Offer. This unaudited pro forma financial information is subject to
risks and uncertainties, including those discussed in the sections entitled Risk Factors Related to Mylan and the Offer and Risk Factors Related to Meda beginning on pages 21 and 35 of this prospectus, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
|
|
Mylan
|
|
|
Meda
|
|
|
|
Historical
|
|
|
Combined
Company Pro
Forma
|
|
|
Equivalent Pro
Forma
|
|
Basic earnings per share
|
|
$
|
1.80
|
|
|
$
|
1.51
|
|
|
$
|
0.12
|
|
Diluted earnings per share
|
|
$
|
1.70
|
|
|
$
|
1.44
|
|
|
$
|
0.11
|
|
Cash dividends declared per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share at period end
|
|
$
|
19.91
|
|
|
$
|
20.74
|
|
|
$
|
1.60
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
Meda
|
|
|
|
|
|
|
|
|
|
Historical
|
|
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
$
|
0.38
|
|
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
$
|
0.38
|
|
Cash dividends declared per share
|
|
|
|
|
|
|
|
|
|
$
|
0.30
|
|
Book value per share at period end
|
|
|
|
|
|
|
|
|
|
$
|
6.78
|
|
18
COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION
Mylan Shares are listed on NASDAQ and the TASE, in each case under the symbol MYL. Meda shares are listed on Nasdaq Stockholm under the symbol
MEDA-A.
The following table sets forth the quarterly high and low sales prices per Mylan Share on NASDAQ and Meda share on Nasdaq Stockholm
for the periods indicated, in each case as reported in publicly available sources.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mylan Shares
(1)
|
|
|
Meda shares
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2015
|
|
$
|
65.63
|
|
|
$
|
52.21
|
|
|
|
SEK 140.00
|
|
|
|
SEK 110.50
|
|
Three months ended June 30, 2015
|
|
|
76.69
|
|
|
|
57.46
|
|
|
|
152.00
|
|
|
|
111.20
|
|
Three months ended September 30, 2015
|
|
|
73.91
|
|
|
|
39.16
|
|
|
|
144.10
|
|
|
|
115.10
|
|
Three months ended December 31, 2015
|
|
|
55.51
|
|
|
|
37.59
|
|
|
|
126.70
|
|
|
|
95.05
|
|
Year ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2014
|
|
$
|
57.52
|
|
|
$
|
41.97
|
|
|
|
SEK 96.36
|
|
|
|
SEK 74.63
|
|
Three months ended June 30, 2014
|
|
|
55.30
|
|
|
|
44.74
|
|
|
|
125.17
|
|
|
|
92.60
|
|
Three months ended September 30, 2014
|
|
|
53.05
|
|
|
|
44.80
|
|
|
|
112.93
|
|
|
|
87.78
|
|
Three months ended December 31, 2014
|
|
|
59.60
|
|
|
|
45.02
|
|
|
|
113.20
|
|
|
|
85.61
|
|
(1)
|
The high and low sales prices for each fiscal quarter in 2014 and the period in the first fiscal quarter of 2015 beginning on January 1, 2015 and ending on February 27, 2015 reflect the common stock prices of
Mylan Inc., the predecessor entity to Mylan N.V., while the remainder of the first fiscal quarter of 2015 and each subsequent fiscal quarter presented reflect the Mylan Share price, in each case as reported on NASDAQ.
|
As of March 31, 2016, there were approximately 187,000 holders of Mylan Shares, including those held in street or nominee name. As of
March 31, 2016, there were approximately 22,200 holders of Meda shares, including those held in street or nominee name.
Mylan did not
pay dividends in 2015, 2014 or 2013 and does not intend to pay dividends on the Mylan Shares in the near future. Meda declared an annual dividend per Meda share of SEK 2.50, SEK 2.50 and SEK 2.41 in May 2015, 2014 and 2013, respectively. Meda
intends to pay its regular annual dividend of SEK 2.50 per Meda share in May 2016. Such dividend will not reduce the Offer consideration. See The OfferOffer Consideration beginning on page 55 of this prospectus.
The following table sets forth the closing prices per Mylan Share on February 9, 2016, the latest practicable trading day prior to the
announcement of the Offer, and April 8, 2016, the latest practicable trading day prior to the filing of this prospectus. The following table also sets forth the closing prices per Meda share on February 10, 2016, the latest trading day
prior to the announcement of the Offer, and April 8, 2016, the latest practicable trading day prior to the filing of this prospectus.
|
|
|
|
|
|
|
|
|
|
|
Mylan
Share
Closing Price
|
|
|
Meda
Share
Closing Price
|
|
February 9, 2016 (Mylan) and February 10, 2016 (Meda)
|
|
$
|
50.74
|
|
|
|
SEK 86.05
|
|
April 8, 2016
|
|
|
47.00
|
|
|
|
153.10
|
|
The number of Mylan Shares that Meda shareholders receive in connection with the Offer will be determined by reference to
the Offeror Average Closing Price, which reflects the market price of Mylan Shares in the period preceding the Offer being declared unconditional and may vary significantly from the Mylan Share prices set forth above. The value of the Mylan Shares
that form a part of the Offer
19
consideration will change as the market price of Mylan Shares fluctuates during the pendency of the Offer and thereafter, and therefore will likely be different from the prices set forth above at
the time Meda shareholders receive their Mylan Shares. See Risk Factors Related to Mylan and the OfferRisks Related to the OfferThe value of the share portion of the Offer consideration is dependent on the market price of Mylan
Shares. Because the market price of Mylan Shares and the exchange rate between USD and SEK may fluctuate, the market value of the Mylan Shares that will be issued in connection with the Offer may fluctuate beginning on page 26 of this
prospectus.
Meda shareholders are urged to obtain current market quotations for Mylan Shares and Meda shares prior to making any decision with
respect to the Offer.
See The OfferListing of Mylan Shares; Delisting of Meda Shares beginning on page 81 of this prospectus for a
discussion of the possibility that Meda shares will be delisted from Nasdaq Stockholm.
20
RISK FACTORS RELATED TO MYLAN AND THE OFFER
By accepting the Offer, Meda shareholders will be choosing to invest in Mylan Shares. In deciding whether to accept the Offer, you should consider
carefully the following risk factors and the risk factors set forth under the caption Risk Factors Related to Meda, in addition to the other information contained in or incorporated by reference into this prospectus, including the
matters addressed under the caption Forward-Looking Statements. In addition to the other information included and incorporated by reference into this prospectus, you should carefully consider the following risks and the risks set forth
under the caption Risk Factors Related to Meda before deciding whether to accept the Offer. See Where You Can Find More Information beginning on page 162 of this prospectus.
Risks Related to Mylan Following Completion of the Offer
IF COMPLETED, THE OFFER MAY NOT ACHIEVE THE INTENDED BENEFITS OR MAY DISRUPT MYLANS PLANS AND OPERATIONS.
We cannot assure you that Mylan will be able to successfully integrate the business of Meda with the business of Mylan or otherwise realize the expected
benefits of the Offer. Mylans ability to realize the anticipated benefits of the Offer will depend, to a large extent, on Mylans ability to integrate Meda with the business of Mylan and realize the benefits of the Combined Company. The
combination of two independent businesses is a complex, costly, and time-consuming process. Mylans business may be negatively impacted following the completion of the Offer if it is unable to effectively manage its expanded operations. The
integration will require significant time and focus from management following the completion of the Offer and may divert attention from the day-to-day operations of the Combined Company. Additionally, completion of the Offer could disrupt current
plans and operations, which could delay the achievement of Mylans strategic objectives.
The expected synergies and operating efficiencies of the
Offer may not be fully realized, which could result in increased costs and have a material adverse effect on Mylans business, financial condition, results of operations, cash flows, and/or share price. In addition, the overall integration of
the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships, and diversion of managements attention, among other potential adverse consequences. The difficulties of
combining the operations of the businesses include, among others:
|
|
|
the diversion of managements attention to integration matters;
|
|
|
|
difficulties in achieving anticipated synergies, operating efficiencies, business opportunities, and growth prospects from combining Meda with Mylan;
|
|
|
|
difficulties in the integration of operations and systems, including enterprise resource planning (ERP) systems;
|
|
|
|
difficulties in the integration of employees;
|
|
|
|
difficulties in managing the expanded operations of a significantly larger and more complex company;
|
|
|
|
challenges in keeping existing customers and obtaining new customers; and
|
|
|
|
challenges in attracting and retaining key personnel.
|
Many of these factors will be outside of Mylans
control and any one of them could result in increased costs, decreased revenues, and diversion of managements time and energy, which could have a material adverse effect on Mylans business, financial condition, results of operations,
cash flows, and/or share price. In addition, even if the operations of Mylan and Meda are integrated successfully, Mylan may not realize the full anticipated benefits of the Offer, including the synergies, operating efficiencies, or sales or growth
opportunities. These benefits may not be achieved within the anticipated time frame or at all. Any of these factors could cause dilution to the
21
earnings per share of the Combined Company, decrease or delay the expected accretive effect of the Offer, and/or negatively impact the price of the Mylan Shares after completing the proposed
acquisition of Meda.
In addition, if Mylan fails to acquire 100 percent of the Meda shares in the Offer and/or until we complete a compulsory acquisition
to acquire any Meda shares not tendered into the Offer, it may be more difficult to achieve the intended benefits of the Offer and could further disrupt our plans and operations.
IF GOODWILL OR OTHER INTANGIBLE ASSETS THAT MYLAN RECORDS IN CONNECTION WITH THE OFFER AND A COMPULSORY ACQUISITION BECOME IMPAIRED, MYLAN COULD HAVE TO
TAKE SIGNIFICANT CHARGES AGAINST EARNINGS.
In connection with the accounting for the Offer and a compulsory acquisition, Mylan expects to record a
significant amount of goodwill and other intangible assets. Under U.S. GAAP, Mylan must assess, at least annually, whether the value of goodwill and indefinite-lived intangible assets has been impaired. Amortizing intangible assets will also be
assessed for impairment in the event of an impairment indicator. Any reduction or impairment of the value of goodwill or other intangible assets will result in a charge against earnings, which could have a material adverse effect on Mylans
business, financial condition, results of operations, shareholders equity, and/or share price.
AN INABILITY TO IDENTIFY OR SUCCESSFULLY BID
FOR SUITABLE ACQUISITION TARGETS, OR CONSUMMATE AND EFFECTIVELY INTEGRATE RECENT AND FUTURE POTENTIAL ACQUISITIONS, OR TO EFFECTIVELY DEAL WITH AND RESPOND TO UNSOLICITED BUSINESS PROPOSALS, COULD LIMIT MYLANS FUTURE GROWTH AND HAVE A MATERIAL
ADVERSE EFFECT ON MYLANS BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS, CASH FLOWS, AND/OR SHARE PRICE.
After the completion of the
Offer, Mylan intends to continue to seek to expand its product line and/or business platform organically as well as through complementary or strategic acquisitions of other companies, products, or assets or through joint ventures, licensing
agreements, or other arrangements. Acquisitions or similar arrangements may prove to be complex and time consuming and require substantial resources and effort. Mylan may compete for certain acquisition targets with companies having greater
financial resources than Mylan or other advantages over Mylan that may hinder or prevent Mylan from acquiring a target company or completing another transaction, which could also result in significant diversion of management time, as well as
substantial out-of-pocket costs.
If an acquisition is consummated, the integration of such acquired business, product, or other assets into Mylan may
also be complex, time consuming, and result in substantial costs and risks. The integration process may distract management and/or disrupt Mylans ongoing businesses, which may adversely affect Mylans relationships with customers,
employees, partners, suppliers, regulators, and others with whom Mylan has business or other dealings. In addition, there are operational risks associated with the integration of acquired businesses. These risks include, but are not limited to,
difficulties in achieving or inability to achieve identified or anticipated financial and operating synergies, cost savings, revenue synergies, and growth opportunities; difficulties in consolidating or inability to effectively consolidate
information technology and manufacturing platforms, business applications, and corporate infrastructure; the impact of pre-existing legal and/or regulatory issues, such as quality and manufacturing concerns, among others; the risks that the acquired
business does not operate to the same quality, manufacturing, or other standards as Mylan does; the impacts of substantial indebtedness and assumed liabilities; challenges associated with operating in new markets; and the unanticipated effects of
export controls, exchange rate fluctuations, domestic and foreign political conditions, and/or domestic and foreign economic conditions.
In addition, in
April 2015, Mylan received an unsolicited and subsequently withdrawn non-binding expression of interest from Teva Pharmaceutical Industries Ltd. (Teva) to acquire all of the outstanding Mylan Shares and
22
may receive similar proposals in the future. Such unsolicited business proposals may not be consistent with or enhancing to our financial, operational, or market strategies (which we believe have
proven to be successful), may not further (or be contrary to) the interests of our shareholders and other stakeholders, including employees, creditors, customers, suppliers, relevant patient populations and communities in which Mylan operates and
may jeopardize the sustainable success of Mylans business. Moreover, the evaluation of and response to such unsolicited business proposals may nevertheless distract management and/or disrupt our ongoing businesses, which may adversely affect
our relationships with customers, employees, partners, suppliers, regulators, and others with whom we have business or other dealings.
Mylan may be
unable to realize synergies or other benefits, including tax savings, expected to result from acquisitions, joint ventures, or other transactions or investments Mylan may undertake, or Mylan may be unable to generate additional revenue to offset any
unanticipated inability to realize these expected synergies or benefits. Realization of the anticipated benefits of acquisitions or other transactions could take longer than expected, and implementation difficulties, unforeseen expenses,
complications and delays, market factors, or deterioration in domestic and global economic conditions could reduce the anticipated benefits of any such transactions. Mylan also may inherit legal, regulatory, and other risks that occurred prior to
the acquisition, whether known or unknown to Mylan.
Any one of these challenges or risks could impair Mylans growth and ability to compete, require
Mylan to focus additional resources on integration of operations rather than other profitable areas, require Mylan to reexamine its business strategy, or otherwise cause a material adverse effect on Mylans business, financial condition,
results of operations, cash flows, and/or share price.
MYLANS ACTUAL FINANCIAL CONDITION AND RESULTS OF OPERATIONS MAY DIFFER MATERIALLY FROM
THE UNAUDITED PRO FORMA FINANCIAL INFORMATION INCLUDED IN THIS PROSPECTUS.
The unaudited pro forma financial information contained in this
prospectus is presented for illustrative purposes only and may not be an indication of what Mylans financial condition or results of operations would have been had the Offer been completed on the dates indicated. The unaudited pro forma
financial information has been derived from the consolidated financial statements of Mylan and Meda and certain adjustments and assumptions have been made regarding Mylan after giving effect to the Offer. The information upon which these adjustments
and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with complete accuracy. For example, the unaudited pro forma financial information does not reflect all costs that are expected to be
incurred by Mylan in connection with the Offer and, if applicable, a compulsory acquisition. In addition, the final amount of any charges relating to acquisition accounting adjustments that Mylan may be required to record will not be known until
following the closing of the Offer and, if applicable, a compulsory acquisition. Accordingly, the actual financial condition and results of operations of Mylan following the completion of the Offer and, if applicable, a compulsory acquisition may
not be consistent with, or evident from, this unaudited pro forma financial information. In addition, the assumptions used in preparing the unaudited pro forma financial information may not prove to be accurate, and other factors may affect
Mylans business, financial condition, results of operations, cash flows, and/or share price following closing of the Offer, including, among others, those described herein. See Unaudited Pro Forma Financial Information beginning on
page 148 of this prospectus.
MYLAN WILL NEED TO TIMELY AND EFFECTIVELY IMPLEMENT ITS INTERNAL CONTROLS OVER MEDAS OPERATIONS AS REQUIRED
UNDER THE SARBANES-OXLEY ACT OF 2002.
Following the completion of the Offer, Mylan will need to timely and effectively implement its own internal
controls and procedures over Meda necessary for Mylan to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, including the requirements to provide in the future an annual management assessment of the effectiveness of
internal control over financial reporting (ICFR) and an audit report by
23
Mylans independent registered public accounting firm. Mylan intends, to the extent necessary, to take appropriate measures to establish or implement an internal control environment at Meda
so that Mylan meets the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 when required. However, it is possible that Mylan may experience delays in implementing any required controls or may be unable to implement the required
internal financial reporting controls and procedures with respect to Meda. In addition, in connection with the audit of ICFR required under the Sarbanes-Oxley Act of 2002 by Mylans independent registered public accounting firm, Mylan may
encounter problems or delays in completing the implementation of any recommended improvements or the independent registered public accounting firm may be unable to conclude that Mylans ICFR is effective. If Mylan cannot favorably assess the
effectiveness of its ICFR, or if Mylans independent registered public accounting firm is unable to provide an audit report finding that Mylans ICFR is effective, there could be a material adverse effect on Mylans business,
financial condition, results of operations, cash flows, and/or share price.
WHILE MYLAN CURRENTLY EXPECTS THE OFFER TO BE IMMEDIATELY ACCRETIVE TO
ITS ADJUSTED ANNUAL EARNINGS PER SHARE FOLLOWING ITS COMPLETION, A DECREASE OR DELAY IN THE EXPECTED ACCRETIVE EFFECT OF THE OFFER TO MYLANS ANNUAL ADJUSTED EARNINGS PER SHARE MAY NEGATIVELY AFFECT THE MARKET PRICE OF MYLAN SHARES.
Mylan currently expects the Offer to be accretive to its adjusted annual earnings per share immediately upon the completion of the Offer. This is
based on certain assumptions and may change materially. Mylan could also encounter additional costs or other factors such as the failure to realize some or all of the benefits anticipated in the Offer or the difficulty of managing a larger company.
Any of these factors could cause dilution to the earnings per share of the combined business, decrease or delay any potential accretive effect of the Offer, and/or have a material adverse effect on Mylans business, financial condition, results
of operations, cash flows, and/or share price.
MYLAN WILL INCUR A SUBSTANTIAL AMOUNT OF INDEBTEDNESS TO ACQUIRE THE MEDA SHARES PURSUANT TO THE
OFFER AND A COMPULSORY ACQUISITION.
In connection with the Offer, Mylan obtained the Bridge Credit Facility, which provides for loans of up to $6
billion to fund the cash portion of the consideration for the Offer and a compulsory acquisition, if applicable, and pay related transaction expenses. Mylan cannot guarantee that it will be able to generate sufficient cash flow to make all of the
principal and interest payments under this indebtedness when such payments are due or that it will be able to refinance such indebtedness on favorable terms, or at all. The failure to so repay or refinance such indebtedness when due could have a
material adverse effect on Mylans business, financial condition, results of operations, cash flows and/or share price.
DISRUPTION IN THE
FINANCIAL MARKETS COULD AFFECT MYLANS ABILITY TO REFINANCE THE BRIDGE CREDIT FACILITY ON FAVORABLE TERMS, OR AT ALL.
If and to the extent
drawn, the Bridge Credit Facility must be repaid within 364 days of the funding date. Mylan anticipates refinancing, or obtaining alternative financing to repay, the Bridge Credit Facility. Disruptions in the commercial credit markets or uncertainty
in the United States, European Union or elsewhere could result in a tightening of financial markets. As a result of financial market turmoil or other economic, financial or commercial factors, Mylan may not be able to obtain alternate financing in
order to repay the Bridge Credit Facility or refinance the Bridge Credit Facility on favorable terms, or at all. The failure to so repay or refinance such indebtedness when due could have a material adverse effect on Mylans business, financial
condition, results of operations, cash flows and/or share price.
If Mylan is unable to successfully obtain alternative financing or refinance the Bridge
Credit Facility on favorable terms and conditions (including, but not limited to, pricing and other fee payments), this could result in
24
additional costs to Mylan. If Mylan is unable to obtain alternate financing or refinance at all, the outstanding amounts under the Bridge Credit Facility must be repaid within 364 days after the
funding date.
MYLAN WILL HAVE SIGNIFICANT ADDITIONAL INDEBTEDNESS WHICH COULD ADVERSELY AFFECT MYLANS FINANCIAL CONDITION, PREVENT MYLAN FROM
FULFILLING ITS OBLIGATIONS WITH RESPECT TO SUCH INDEBTEDNESS AND IMPOSE OTHER FINANCIAL AND OPERATING RESTRICTIONS ON MYLAN. ANY REFINANCING OF THIS DEBT COULD BEAR SIGNIFICANTLY HIGHER INTEREST RATES.
Mylans increased indebtedness following the completion of the Offer and, if applicable, a compulsory acquisition could have adverse consequences,
including but not limited to:
|
|
|
increasing our vulnerability to general adverse economic and industry conditions;
|
|
|
|
requiring us to dedicate a substantial portion of our cash flow from operations to make debt service payments, thereby reducing the availability of cash flow to fund working capital, capital expenditures, acquisitions
and investments and other general corporate purposes;
|
|
|
|
limiting our flexibility in planning for, or reacting to, challenges and opportunities, and changes in our businesses and the markets in which we operate;
|
|
|
|
limiting our ability to obtain additional financing to fund our working capital, capital expenditures, acquisitions and debt service requirements and other financing needs;
|
|
|
|
increasing our vulnerability to increases in interest rates in general because a substantial portion of our indebtedness bears interest at floating rates; and
|
|
|
|
placing us at a competitive disadvantage to our competitors that have less debt.
|
In addition, although the
Combined Company is expected to maintain an investment grade credit rating, Mylans increased indebtedness following the completion of the Offer and, if applicable, a compulsory acquisition could result in a downgrade in the credit rating of
Mylan or any indebtedness of Mylan or its subsidiaries. A downgrade in the credit rating of Mylan or any indebtedness of Mylan or its subsidiaries could increase the cost of further borrowings or refinancings of such indebtedness, limit access to
sources of financing in the future or lead to other adverse consequences.
The terms of Mylans indebtedness today impose, and any additional
indebtedness we incur in the future, or may impose, significant operating and financial restrictions on us. These restrictions limit our ability to, among other things, incur additional indebtedness, make investments, pay certain dividends, prepay
other indebtedness, sell assets, incur certain liens, enter into agreements with our affiliates and restrict our subsidiaries ability to pay dividends, merge or consolidate. In addition, certain of our credit facilities and accounts receivable
securitization facility, as well as certain agreements governing Medas indebtedness, require the respective company to maintain specified financial ratios. A breach of any of these covenants or our inability to maintain the required financial
ratios could result in a default under the related indebtedness. If a default occurs, the relevant lenders could elect to declare our indebtedness, together with accrued interest and other fees, to be immediately due and payable. These factors could
have a material adverse effect on our business, financial condition, results of operations, cash flows, and/or share price. See Risk Factors Related to MedaMeda may be unable to continue to secure financing on agreeable terms and a
sudden change in Medas liquidity could impede its ability to fulfill existing payment obligations as they become due.
25
LOSS OF KEY PERSONNEL COULD LEAD TO LOSS OF CUSTOMERS, BUSINESS DISRUPTION, AND A DECLINE IN REVENUES,
ADVERSELY AFFECT THE PROGRESS OF PIPELINE PRODUCTS, OR OTHERWISE ADVERSELY AFFECT THE OPERATIONS OF MYLAN.
Mylans success after the
completion of the Offer will depend in part upon its ability to retain key employees of Mylan and Meda. Prior to and following the completion of the Offer, employees of Mylan and Meda might experience uncertainty about their future roles with Mylan
following the completion of the Offer, which might adversely affect Mylans ability to retain key managers and other employees of both companies. Competition for qualified personnel in the pharmaceutical industry is very intense. Mylan may lose
key personnel or may be unable to attract, retain, and motivate qualified individuals or the associated costs to Mylan may increase significantly, which could have a material adverse effect on the business, financial condition, results of
operations, cash flows, and/or share price of Mylan.
Risks Related to the Offer
THE VALUE OF THE SHARE PORTION OF THE OFFER CONSIDERATION IS DEPENDENT ON THE MARKET PRICE OF MYLAN SHARES. BECAUSE THE MARKET PRICE OF MYLAN SHARES AND
THE EXCHANGE RATE BETWEEN USD AND SEK MAY FLUCTUATE, THE MARKET VALUE OF THE MYLAN SHARES THAT WILL BE ISSUED IN CONNECTION WITH THE OFFER MAY FLUCTUATE.
Unless Mylan adjusts the Offer consideration in the event the Share Cap is exceeded, each Meda shareholder who tenders into the Offer will receive, in respect
of 80 percent of the number of Meda shares tendered by such shareholder, SEK 165 in cash per Meda share; and in respect of the remaining 20 percent of the number of Meda shares tendered by such shareholder,
(i) if the Offeror Average Closing Price is greater than $50.74, a number of Mylan Shares per Meda share equal to SEK 165 divided by the
Offeror Average Closing Price as converted from USD to SEK at the Announcement Exchange Rate;
(ii) if the Offeror Average Closing Price is
greater than $30.78 and less than or equal to $50.74, 0.386 Mylan Shares per Meda share; or
(iii) if the Offeror Average Closing Price is
less than or equal to $30.78, a number of Mylan Shares per Meda share equal to SEK 100 divided by the Offeror Average Closing Price as converted from USD to SEK at the Announcement Exchange Rate.
Because there is a fixed exchange ratio of 0.386 Mylan Shares per Meda share when the Offeror Average Closing Price is greater than USD 30.78 and less than or
equal to USD 50.74, Meda shareholders will bear the risk of declines in the market price of Mylan Shares that cause the Offeror Average Closing Price to fluctuate within that range.
The Offeror Average Closing Price could vary significantly from the market value of Mylan Shares as of the date of this prospectus or as of the dates on which
Meda shareholders tender their shares, which could result in the value of the share portion of the Offer consideration being lower than it would have been as of such dates. In addition, the value of the share portion of the Offer consideration will
never exceed SEK 33 in Mylan Shares per Meda share (based on the Offeror Average Closing Price converted from USD to SEK at the Announcement Exchange Rate).
Until Mylan declares the Offer unconditional, which will not occur until such time as the conditions to the Offer, including the condition that holders of
more than 90 percent of the outstanding Meda shares tender their shares into the Offer, have either been satisfied or waived, the Offeror Average Closing Price cannot be calculated. As a result, Meda shareholders may be uncertain of the value of the
share portion of the Offer consideration when they make the decision to tender their shares. Similarly, Mylan will not announce whether it is electing to adjust the
26
Offer consideration in the event the Share Cap is exceeded until it declares the Offer unconditional, so Meda shareholders may be uncertain of the allocation of the Offer consideration between
cash and Mylan Shares when they make the decision to tender their shares.
The terms of the Offer do not provide for an adjustment mechanism in the case
of any increases or decreases in the price of Mylan Shares or Meda shares after the Offeror Average Closing Price is publicly announced, including with respect to Meda shares that are tendered during any subsequent acceptance period. While
settlement for the initial acceptance period is expected to take place within five business days after the date that the Offer is declared unconditional, the market value of the Mylan Shares that tendering Meda shareholders will receive in the Offer
could still vary significantly from the Offeror Average Closing Price.
See Comparative Market Price and Dividend Information beginning on
page 19 of this prospectus for the historical high and low sales prices of Mylan Shares and Meda shares, as well as the historical cash dividends per Mylan Share and Meda share, respectively. You are urged to obtain current market quotations for
Mylan Shares and Meda shares when you consider whether to tender your Meda shares pursuant to the Offer.
The number of Mylan Shares that will be issued
as the share portion of the Offer consideration is based upon the Announcement Exchange Rate. Fluctuations in the exchange rate between USD and SEK may further affect the value in SEK of the Mylan Shares that are issued in connection with the Offer.
There will be no adjustment to the Offer consideration based on fluctuations in currency rates from the Announcement Exchange Rate. Accordingly, if the value of SEK falls relative to USD, the Offer consideration will consist of a lower value in SEK
terms to Meda shareholders, which could cause the total Offer consideration to fall below SEK 152 at prevailing SEK/USD exchange rates.
See
Exchange Rate Information beginning on page 15 of this prospectus for historical SEK to USD exchange rate information. You are urged to obtain current market currency exchange rates when you consider whether to tender your Meda shares
pursuant to the Offer.
THE OFFER MAY NOT BE COMPLETED ON THE TERMS OR TIMELINE CURRENTLY CONTEMPLATED, OR AT ALL.
Mylans obligation to complete the Offer is subject to the satisfaction or waiver of a number of customary closing conditions, including (i) holders
of more than 90 percent of the outstanding Meda shares tendering their shares into the Offer and (ii) receipt of all necessary regulatory, governmental or similar clearances, approvals and decisions, including from competition authorities.
Since the fulfillment of these conditions is beyond Mylans control, there are no guarantees as to when the Offer will be completed, or that it will be
completed at all. Uncertainty in the financial markets regarding if or when the Offer will be completed may negatively affect the price of Mylan Shares and/or Meda shares. In addition, to grant such clearances, approvals, and decisions, competition
authorities may impose requirements, limitations, or costs on the conduct of Mylans businesses or require divestitures after completion of the Offer that could delay the completion of the Offer or may reduce the anticipated benefits of the
Offer.
If the proposed acquisition of Meda is not completed for any reason, Mylan and/or Meda would be subject to a number of risks, including, among
others:
|
|
|
incurring substantial expenses and costs, including legal, accounting, financing, and advisory fees, that Mylan and/or Meda would be unable to recover; and
|
|
|
|
negative reactions from the financial markets or from Mylans and/or Medas respective customers, vendors, and employees.
|
Any of these factors could have a material adverse effect on Mylans or Medas respective business, financial condition, results of operations, cash
flows, and/or share price.
27
THE OFFER MAY ADVERSELY AFFECT THE LIQUIDITY AND VALUE OF NON-TENDERED MEDA SHARES.
In the event that not all of the Meda shares are tendered into the Offer and we accept for exchange those shares tendered into the Offer, the number of
shareholders and the number of Meda shares held by individual holders will be greatly reduced. As a result, Mylans acceptance of Meda shares for exchange in the Offer could adversely affect the liquidity and could also adversely affect the
market value of the remaining Meda shares held by the public. If Mylan becomes the owner of more than 90 percent of the Meda shares, Mylan intends to promote the delisting of the Meda shares from Nasdaq Stockholm. As a result of such delisting, Meda
shares not tendered pursuant to the Offer may become illiquid and may be of reduced value. See Risk Factors Related to Mylan and the OfferHolders of Meda shares that do not accept the Offer and whose Meda shares are acquired by Mylan in
the compulsory acquisition proceedings may not receive payment for a significant period of time after completion of the Offer beginning on page 28 of this prospectus.
HOLDERS OF MEDA SHARES THAT DO NOT ACCEPT THE OFFER AND WHOSE MEDA SHARES ARE ACQUIRED BY MYLAN IN THE COMPULSORY ACQUISITION PROCEEDINGS MAY NOT
RECEIVE PAYMENT FOR A SIGNIFICANT PERIOD OF TIME AFTER COMPLETION OF THE OFFER.
If Mylan becomes the owner of more than 90 percent of the Meda
shares, Mylan intends to initiate a compulsory acquisition procedure with respect to the remaining Meda shares in accordance with the Swedish Companies Act. It may take 18 months or more from initiation of the compulsory acquisition procedure until
the arbitration tribunal decides on the purchase price. Thereafter, cash consideration will be distributed to the holders of Meda shares whose shares are acquired through the compulsory acquisition procedure, together with interest thereon at a
market rate set by the Swedish Central Bank pursuant to Swedish law. If advance title
(Sw. förhandstillträde
) to the Meda shares is obtained by Mylan (which means that full ownership is obtained by Mylan with respect to the
remaining Meda shares before the arbitration proceedings regarding the consideration have been completed), the arbitration tribunal may issue a separate award with respect to that portion of the purchase price that is not disputed by Mylan. In that
case, Mylan would be obliged to pay such portion prior to the final arbitration award.
As a result, holders of Meda shares who do not accept the Offer
and whose Meda shares are subsequently acquired in the compulsory acquisition proceedings may not receive payment for a significant period of time after completion of the Offer. See The OfferCompulsory Acquisition.
MYLAN MUST OBTAIN REQUIRED APPROVALS AND CONSENTS TO CONSUMMATE THE OFFER, WHICH, IF DELAYED OR NOT GRANTED, MAY JEOPARDIZE OR DELAY THE COMPLETION OF
THE OFFER, RESULT IN ADDITIONAL EXPENDITURES OF MONEY AND RESOURCES, AND/OR REDUCE THE ANTICIPATED BENEFITS OF THE OFFER.
The Offer is subject to
customary closing conditions. These closing conditions include, among others, the effectiveness of the registration statement of which this prospectus forms a part and the receipt of the relevant approvals under the antitrust and competition laws of
certain countries under which filings or approvals are required.
The governmental agencies from which Mylan will seek certain of these approvals have
broad discretion in administering the governing regulations. As a condition to their approval of the Offer, such agencies may impose requirements, limitations, or costs or require divestitures or place restrictions on the conduct of Mylans
businesses after completion of the Offer. These requirements, limitations, costs, divestitures, or restrictions could delay the completion of the Offer or may reduce the anticipated benefits of the Offer. Further, no assurance can be given that the
required closing conditions will be satisfied, and, if all required consents and approvals are obtained and the closing conditions are satisfied, no assurance can be given as to the terms, conditions, and timing of the consents and approvals.
Mylans obligation to consummate the Offer is subject to the receipt of all
28
necessary regulatory, governmental or similar clearances, approvals and decisions, including from competition authorities, in each case on terms which, in Mylans opinion, are acceptable.
However, pursuant to the Swedish Takeover Rules, Mylan is only permitted to withdraw the Offer on the basis of actions required to be taken to obtain regulatory, governmental or similar clearances if such actions are of material importance to
Mylans acquisition of Meda.
If Mylan agrees to any material requirements, limitations, costs, divestitures, or restrictions in order to obtain any
approvals required to consummate the Offer, these requirements, limitations, costs, divestitures or restrictions could adversely affect Mylans ability to integrate Mylans operations with Meda or reduce the anticipated benefits of the
Offer. This could delay the completion of the Offer or have a material adverse effect on Mylans business, financial condition, results of operations, cash flows, and/or share price. For further information regarding required approvals and
consents, see The OfferRegulatory Approvals beginning on page 83 of this prospectus.
THE MARKET PRICE OF MYLAN SHARES AFTER THE
OFFER MAY BE AFFECTED BY FACTORS DIFFERENT FROM THOSE CURRENTLY AFFECTING MEDA SHARES.
The businesses of Mylan and Meda differ in many respects,
including relative focus on specialty brands, generics and OTC and, accordingly, the results of operations of Mylan and the market price of Mylan Shares after the Offer may be affected by factors different from those currently affecting the
independent results of operations of Mylan and Meda and the market price of Meda shares. For a discussion of the businesses of Mylan and Meda and of certain factors to consider in connection with their respective businesses, see the Mylan documents
incorporated by reference into this prospectus and referred to under Where You Can Find More Information beginning on page 162 of this prospectus, the audited consolidated financial statements and related notes thereto of Meda included
in this prospectus and the description of Medas business included in the section of this prospectus entitled Information Regarding Meda. See Comparative Market Price and Dividend Information beginning on page 19 of this
prospectus for additional information on the historical market value of Mylan Shares and Meda shares.
THE MARKET FOR MYLAN SHARES MAY BE ADVERSELY
AFFECTED BY THE ISSUANCE OF MYLAN SHARES PURSUANT TO THE OFFER.
In connection with the completion of the Offer, and as described and based on the
assumptions set forth in the section of this prospectus entitled The OfferOwnership of Mylan After the Offer beginning on page 59, Mylan expects to issue approximately 28.2 million Mylan Shares in connection with the Offer.
The issuance of these new Mylan Shares could have the effect of depressing the market price for Mylan Shares.
Other than the Mylan Shares held by Stena
and Fidim subject to certain selling restrictions pursuant to the shareholder agreements entered into between Mylan and each of Stena and Fidim, the new Mylan Shares to be issued in connection with the Offer will be freely tradable upon completion
of the Offer. The issuance of Mylan Shares to Meda shareholders who may not have the ability or wish to hold such shares, may lead to sales of such shares or the perception that such sales may occur, either of which may adversely affect the market
for, and the market price of, Mylan Shares.
THE MYLAN SHARES TO BE RECEIVED BY MEDA SHAREHOLDERS IN CONNECTION WITH THE OFFER WILL HAVE DIFFERENT
RIGHTS FROM THE MEDA SHARES.
There will be material differences between the current rights of holders of Meda shares and the rights such holders
can expect as shareholders of Mylan. Under the terms of the Offer and if the Offer is completed, Meda shareholders will receive a combination of Mylan Shares and cash consideration, and will consequently become holders of Mylan Shares. Mylan is
organized under the laws of the Netherlands and Meda is organized under the laws of Sweden. Therefore, differences in the rights of holders of Mylan Shares and Meda shares arise both from
29
differences between the Mylan Articles and the Meda Articles and also from differences between Dutch and Swedish law. As holders of Mylan Shares, your rights with respect thereto will be governed
primarily by Dutch law, including the Dutch Civil Code and the Dutch Corporate Governance Code, as well as Mylans constituent documents. For a detailed discussion of the material differences between the current rights of Meda shareholders, and
the rights you can expect as a holder of Mylan Shares, please see our discussion in the section of this prospectus entitled Comparison of Shareholders Rights beginning on page 120.
Certain features of our governance arrangements or that are otherwise available under Dutch law may discourage, delay, or prevent a change in control of
Mylan, even if such a change in control is sought by Mylans shareholders. This may affect the market price of Mylan Shares. See Description of Ordinary SharesProtective Measures beginning on page 177 of this prospectus for
summaries of such anti-takeover provisions.
THE PRIMARY LISTING OF THE MYLAN SHARES IS IN THE U.S. WHICH MAY EXPOSE NON-U.S. SHAREHOLDERS TO
ADDITIONAL RISKS.
The primary listing for the Mylan Shares to be delivered in connection with the Offer will be NASDAQ, and such shares will also
be listed secondarily on the TASE. The Mylan Shares listed on NASDAQ are traded in USD and the value of the Mylan Shares for a non-U.S. shareholder will not only be dependent on the value of Mylan following completion of the Offer, but also on the
applicable exchange rate. For example, changes in the SEK/USD exchange rate may have an adverse effect on the value in SEK of Mylan Shares, notwithstanding the absence of any material events affecting Mylans business and its share price
following completion of the Offer. Further, the fact that the Mylan Shares will not be listed in Sweden may cause additional transaction costs and logistical challenges for persons holding their Mylan Shares through Euroclear, such as delays in
effecting transactions in Mylan Shares.
MYLAN DOES NOT ANTICIPATE PAYING DIVIDENDS FOR THE IMMEDIATE FUTURE, AND MEDA SHAREHOLDERS WHO RECEIVE
MYLAN SHARES IN CONNECTION WITH THE OFFER MUST RELY ON INCREASES IN THE TRADING PRICE OF MYLAN SHARES TO OBTAIN A RETURN ON THEIR INVESTMENT.
Mylan does not anticipate paying dividends in the immediate future. Mylan anticipates that it will retain all earnings, if any, to support its operations and
to pursue additional transactions to deliver additional shareholder value. Any future determination as to the payment of dividends will, subject to Dutch law requirements, be at the sole discretion of the Mylan Board and will depend on Mylans
financial condition, results of operations, capital requirements, and other factors the Mylan Board deems relevant at that time. Mylan shareholders must rely on increases in the trading price of their shares to obtain a return on their investment in
the foreseeable future.
If Mylan were to pay dividends in the future with respect to the Mylan Shares, it would administer payment of such dividends to
holders of shares registered with Euroclear through Euroclear. However, the methodology for providing payments of dividends through Euroclear has not yet been established and no agreement with Euroclear regarding administration of dividends has been
entered into. The absence of an agreement with Euroclear does not deprive holders of Mylan Shares registered with Euroclear of the right to receive future dividend payments, if any, but may cause delays and other problems in relation to the
administration of the dividend.
Furthermore, any dividends paid to holders of shares registered with Euroclear would be subject to the risk of exchange
rate fluctuations. If the Combined Company were to pay dividends in the future with respect to the Mylan Shares, such dividends will be paid in USD. However, investors whose shares are registered with Euroclear would receive dividend distributions
in SEK. Any depreciation of the USD in relation to SEK could reduce the value of the investment or of any dividends. In addition, the holding of shares registered with Euroclear by an investor whose principal currency is not SEK would expose the
investor to additional foreign currency exchange rate risk.
30
DUAL AFFILIATION WITH SECURITIES DEPOSITORIES MAY ENTAIL LOGISTICAL AND TECHNICAL CHALLENGES FOR
SHAREHOLDERS WHOSE SHARES ARE REGISTERED WITH EUROCLEAR.
The Mylan Shares are deposited with the Depository Trust Company and the Mylan Shares to
be issued in connection with the Offer will be delivered to Meda shareholders through the system of Euroclear. It is possible that this arrangement will entail logistical and technical challenges for Meda shareholders whose shares are registered
with Euroclear. Such challenges may include delays in transfers of shares between the depositories, receiving any dividends, notices distributed via the depositories, and difficulties in exercising any or all of the shareholders rights, such
as attending annual shareholder meetings.
MEDA SHAREHOLDERS WILL HAVE A REDUCED OWNERSHIP AND VOTING INTEREST AFTER THE COMPLETION OF THE OFFER AND
WILL EXERCISE LESS INFLUENCE OVER THE MANAGEMENT AND POLICIES OF MYLAN THAN THEY DO OVER MEDA.
When Meda shares are accepted in the Offer, each
participating Meda shareholder will become a shareholder of Mylan with a percentage ownership of Mylan that is much smaller than the shareholders percentage ownership of Meda. Mylan has assumed, solely for the purposes of this calculation that
(i) the number of Meda shares outstanding immediately prior to the completion of the Offer will be approximately 365.5 million, (ii) the number of Mylan Shares outstanding on a fully diluted basis immediately prior to the completion
of the Offer will be approximately 514.6 million, (iii) Mylan will not adjust the Offer consideration in the event the Share Cap is exceeded, (iv) the Offeror Average Closing Price will be between $30.78 and $50.74 and (v) 100
percent of the outstanding Meda shares will be tendered into the Offer. Based on these assumptions, we expect that Mylan shareholders will own, in the aggregate, approximately 95 percent of the outstanding Mylan Shares on a fully diluted basis
immediately after completion of the Offer and former Meda shareholders will own, in the aggregate, approximately 5 percent of the outstanding Mylan Shares on a fully diluted basis immediately after completion of the Offer. As a result, Meda
shareholders will have less influence over the management and policies of Mylan than they now have over the management and policies of Meda.
In addition,
if Mylan becomes the owner of more than 90 percent of the Meda shares, Mylan intends to initiate a compulsory acquisition procedure with respect to the remaining Meda shares in accordance with the Swedish Companies Act. Because shares acquired
pursuant to a compulsory acquisition procedure must be paid for in cash, holders of such Meda shares will not receive Mylan Shares as part of the consideration for their Meda shares, and former Meda shareholders will own in the aggregate a lower
percentage of the outstanding Mylan Shares than they otherwise would have owned had all Meda shareholders tendered their shares into the Offer.
Similarly, if Mylan adjusts the Offer consideration in the event the Share Cap is exceeded (by increasing the cash portion of the Offer consideration and
correspondingly decreasing the share portion of the Offer consideration), former Meda shareholders will receive fewer Mylan Shares than they otherwise would have been delivered had Mylan not adjusted the Offer consideration, and former Meda
shareholders will own in the aggregate a lower percentage of the outstanding Mylan Shares than they otherwise would have owned had Mylan not adjusted the Offer consideration.
EACH OF STENA AND FIDIM MAY HAVE INTERESTS IN THE OFFER THAT MAY BE DIFFERENT FROM, OR IN ADDITION TO, THE INTERESTS OF THE OTHER MEDA SHAREHOLDERS.
Stena and Fidim, which as of February 10, 2016 owned approximately 21 percent and 9 percent, respectively, of the outstanding shares and
votes of Meda, have each entered into an irrevocable undertaking with Mylan, pursuant to which each has agreed to accept the Offer, subject to certain conditions. In addition, each of Stena and Fidim have entered into a shareholder agreement with
Mylan, pursuant to which, among other things, each is restricted for a certain period from disposing of the Mylan Shares it receives pursuant to the Offer and from voting against the recommendation of the Mylan Board. As a result of these
agreements, each of Stena and Fidim
31
may have interests in the Offer that are different from, or in addition to, or may be deemed to conflict with, interests of the other Meda shareholders. Meda shareholders are encouraged to
evaluate the Offer based on their own individual circumstances. See The OfferIrrevocable Undertakings to Accept the Offer; Shareholder Agreements beginning on page 80 of this prospectus.
MYLAN WILL INCUR SIGNIFICANT TRANSACTION-RELATED COSTS IN CONNECTION WITH THE OFFER, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON MYLANS
BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS, CASH FLOWS AND/OR SHARE PRICE
.
Mylan will incur significant transaction costs
relating to the Offer, including legal, accounting, financial advisory, regulatory, and other expenses, which could have a material adverse effect on Mylans business, financial condition, results of operations, cash flows and/or share price.
Many of these expenses are payable by Mylan whether or not the Offer is completed. Most of these expenses will be comprised of transaction costs related to the Offer and the Bridge Credit Facility. Mylan will also incur transaction fees and costs
related to formulating integration plans. These fees and costs may be higher or lower than estimated. Additional unanticipated costs may be incurred in the integration of the two companies businesses.
Although Mylan expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the
businesses, should allow Mylan to offset incremental transaction-related costs over time, this net benefit may not be achieved in the near term, or at all.
THE BUSINESS RELATIONSHIPS OF MYLAN AND MEDA, INCLUDING CUSTOMER RELATIONSHIPS, MAY BE SUBJECT TO DISRUPTION DUE TO UNCERTAINTY ASSOCIATED WITH THE
OFFER.
Parties with which Mylan and Meda currently do business or may do business in the future, including customers and suppliers, may experience
uncertainty associated with the Offer, including with respect to current or future business relationships with Mylan, Meda or the Combined Company. As a result, the business relationships of Mylan and Meda may be subject to disruptions if customers,
suppliers, or others attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than Mylan or Meda. For example, certain customers and collaborators may have contractual
consent rights or termination rights that may be triggered by a change of control or assignment of the rights and obligations of contracts that will be transferred in the Offer. These disruptions could have a material adverse effect on the business,
financial condition, results of operations, cash flows, and/or share price of Mylan or the Combined Company or a material adverse effect on the business, financial condition, results of operations, and/or cash flows of Meda. The effect of such
disruptions could be exacerbated by a delay in the completion of the Offer.
IF COUNTERPARTIES TO CERTAIN AGREEMENTS WITH MEDA, INCLUDING CERTAIN
DEBT AGREEMENTS, DO NOT CONSENT, CHANGE OF CONTROL RIGHTS UNDER THOSE AGREEMENTS MAY BE TRIGGERED AS A RESULT OF THE OFFER, WHICH COULD CAUSE THE COMBINED COMPANY TO LOSE THE BENEFIT OF SUCH AGREEMENTS AND INCUR MATERIAL LIABILITIES OR REPLACEMENT
COSTS.
Meda is party to agreements that contain change-of-control, or certain other provisions that will be triggered as a result of the Offer
and/or the completion of the Offer. If the counterparties to these agreements do not consent to the proposed acquisition of Meda by Mylan, the counterparties may have the ability to exercise certain rights (including termination rights), resulting
in Meda incurring liabilities as a consequence of breaching such agreements, or causing the Combined Company to lose the benefit of such agreements or incur costs in seeking replacement agreements.
Meda has certain debt obligations that contain change-of-control, or certain other provisions, that will be triggered as a result of the Offer and/or the
completion of the Offer. If these provisions are triggered, the debt
32
obligations may have to be repurchased, refinanced or otherwise settled. Mylan cannot assure you that sufficient funds will be available to repurchase any outstanding debt obligations or that
Mylan will be able to refinance or otherwise settle such debt obligations on favorable terms, if at all.
THE OFFER, IF SUCCESSFUL, WILL TRIGGER
PROVISIONS CONTAINED IN CERTAIN OF MEDAS EMPLOYEE BENEFIT PLANS OR AGREEMENTS THAT WILL REQUIRE MYLAN TO MAKE CHANGE IN CONTROL PAYMENTS.
Certain of Medas employee benefit plans and agreements contain provisions providing for compensation to be paid to, or received by, certain Meda
employees in connection with a change in control. If successful, the Offer would constitute a change in control of Meda, thereby giving rise to change in control payments.
Risks Related to Mylans Business
You should read and consider risk factors specific to Mylans business that will also affect the Combined Company after the Offer, described in Part I,
Item 1A of Mylan N.V.s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and in other documents that are incorporated by reference into this prospectus. Except as set forth below, there have been no material
changes in Mylans risk factors from those disclosed in such Annual Report. See Where You Can Find More Information beginning on page 162 of this prospectus for the location of information incorporated by reference in this
prospectus.
WE EXPECT TO BE TREATED AS A NON-U.S. CORPORATION FOR U.S. FEDERAL INCOME TAX PURPOSES. ANY CHANGES TO THE TAX LAWS OR CHANGES IN OTHER
LAWS (INCLUDING UNDER APPLICABLE INCOME TAX TREATIES), REGULATIONS, RULES, OR INTERPRETATIONS THEREOF APPLICABLE TO INVERTED COMPANIES AND THEIR AFFILIATES, WHETHER ENACTED BEFORE OR AFTER THE EPD TRANSACTION, MAY MATERIALLY ADVERSELY AFFECT US.
Under current U.S. law, we believe that we should not be treated as a U.S. corporation for U.S. federal income tax purposes as a result of
Mylans acquisition of the EPD Business and Mylan Inc. (the EPD Transaction). Changes to Section 7874 of the Internal Revenue Code (the Code) or, to the U.S. Treasury Regulations promulgated thereunder, or
interpretations thereof, or to other relevant tax laws (including applicable income tax treaties), could affect our status as a non-U.S. corporation for U.S. federal income tax purposes and the tax consequences to us and our affiliates. Any such
changes could have prospective or retroactive application, and may apply even if enacted or promulgated now that the EPD Transaction has closed. If we were to be treated as a U.S. corporation for U.S. federal income tax purposes, or if the relevant
tax laws (including applicable income tax treaties) change, we would likely be subject to significantly greater U.S. tax liability than currently contemplated as a non-U.S. corporation or if the relevant tax laws (including applicable income tax
treaties) had not changed.
On August 5, 2014, the U.S. Treasury Department announced that it is reviewing a broad range of authorities for possible
administrative actions that could limit the ability of a U.S. corporation to complete a transaction in which it becomes a subsidiary of a non-U.S. corporation (commonly known as an inversion transaction) or reduce certain tax benefits
after an inversion transaction takes place. On September 22, 2014 and November 19, 2015, the U.S. Treasury Department issued notices (the Notices) announcing its intention to promulgate certain regulations that will apply to
inversion transactions completed on or after September 22, 2014. Those regulations were promulgated as temporary U.S. Treasury Regulations on April 4, 2016, and they do not affect our belief that we expect to be treated as a non-U.S.
corporation for U.S. federal income tax purposes.
In the Notices, the U.S. Treasury Department also announced that it expected to issue additional
guidance to further limit and reduce the benefits of certain inversion transactions. In particular, it stated that it was considering regulations that may limit the ability of certain foreign-owned U.S. corporations to deduct certain
33
interest payments (so-called earnings stripping). On April 4, 2016, the U.S. Treasury Department issued such regulations in the form of proposed U.S. Treasury Regulations.
Proposed U.S. Treasury Regulations do not currently have the force of law, however, the rules described in the proposed U.S. Treasury Regulations will apply to certain intercompany arrangements entered into on or after April 4, 2016 if and when
the regulations are adopted in final form. The U.S. Treasury Department stated that it intends to finalize swiftly such proposed U.S. Treasury Regulations.
Additionally, there have been recent legislative proposals intended to limit or discourage inversion transactions and on May 20, 2015, the U.S. Treasury
Department announced its intention to revise certain provisions of the model income tax treaties, which, if ultimately adopted by the U.S. and relevant jurisdictions, could reduce potential tax benefits for us and our affiliates by imposing U.S.
withholding taxes on particular payments from our U.S. affiliates to related and unrelated foreign persons. Any such future regulatory or legislative actions regarding inversion transactions or any other changes in relevant tax laws (including under
applicable income tax treaties), if taken, could apply to us, could disadvantage us as compared to other corporations, including non-U.S. corporations that have completed inversion transactions prior to September 22, 2014, and could have a
material adverse effect on our business, financial condition, results of operations, cash flows, and/or ordinary share price.
34
RISK FACTORS RELATED TO MEDA
In deciding whether to accept the Offer, Meda shareholders should consider carefully the following risk factors and the risk factors set forth under the
caption Risk Factors Related to Mylan and the Offer, in addition to the other information contained in or incorporated by reference into this prospectus, including the matters addressed under the caption Forward-Looking
Statements. The following risk factors related to Medas business reflect Medas views and should be read in conjunction with the consolidated financial statements of Meda and related notes thereto included in this prospectus
beginning on page F-1.
MEDA MAY BE UNABLE TO MAINTAIN ITS CURRENT MARGINS ON PRODUCTS DUE TO THE EXPIRATION OF PATENTS, COMPETITOR PRICING,
CHANGES IN THE PAYOR ENVIRONMENT OR A DECREASE IN CONSUMER DEMAND.
The pharmaceutical industry is highly competitive. Price pressure has been and
can be expected to remain significant within Medas business areas, particularly when patents expire. There is thus a risk that Meda will not be able to maintain its current margins on products. There is also a risk that Medas product
candidates or products developed by Medas partners will not be preferred over existing or newly developed products, which may negatively affect Medas operations and financial position. Future products in development by other
pharmaceutical companies may result in increased competition and lower sales of Medas products.
Some Meda products entitle the end customer to
remuneration from paying third parties, such as private insurance companies and public authorities. Changes among such bodies in terms of their scope, efforts, guidelines and ability to influence pricing of and demand for pharmaceuticals may result
in negative commercial and financial effects for Meda.
Other Meda products are not reimbursed by third parties. Reduced purchasing power of the end
consumer may lead to decrease in demand and/or the will to spend money on such products, which may result in lower sales of Medas products.
AN ECONOMIC DOWNTURN OR OTHER MACROECONOMIC TRENDS MAY CAUSE A DECREASE IN DEMAND AND MAY CONSEQUENTLY HAVE A NEGATIVE IMPACT ON MEDAS EARNINGS
AND FINANCIAL POSITION.
Although Meda operates in a large number of geographical markets and its products may be vital for the patient
irrespective of economic trends, there is a risk that a recession may lead to a decreased demand for Medas products and consequently have a negative impact on Medas earnings and financial position.
MEDAS PRODUCTS OR OPERATIONS MAY BECOME SUBJECT TO INCREASED OR CHANGED REQUIREMENTS OR RESTRICTIONS FROM REGULATORY AUTHORITIES, WHICH COULD HAVE
NEGATIVE COMMERCIAL AND FINANCIAL EFFECTS FOR MEDA.
Meda is dependent on and subject to the actions of public authorities. Such actions include
changes in regulations on pricing and discounting of drugs or changes in the conditions for prescribing a certain drug. If Medas products or operations become subject to further or changed requirements or restrictions from regulatory
authorities, it could have negative commercial and financial effects for Meda.
CHALLENGES INHERENT IN DEVELOPING BUSINESS IN EMERGING MARKETS MAY
IMPEDE THE FUTURE GROWTH OF MEDAS PRODUCT PORTFOLIO.
Meda operates in a large number of countries through its own sales organization and
through distributors that manage the sales of Medas products in some markets. In some of these countries, particularly the emerging markets, the financial, political and social situation may be unstable. Medas focus on continuing to
develop
35
business in emerging markets is a significant factor for Medas future growth prospects. Changes in laws and regulations regarding Medas products, intellectual property rights,
increased taxes, or import restrictions, as well as political and economic uncertainty in those countries may result in negative consequences for Medas business, expected earnings and financial position.
SALES OF CERTAIN MEDA PRODUCTS MAY BE ADVERSELY AFFECTED BY UNANTICIPATED SEASONAL VARIATIONS OUTSIDE MEDAS CONTROL.
A portion of Medas sales are dependent on seasonal variations that Meda cannot influence. For instance, a short pollen season or a season with low pollen
counts may lead to reduced sales of certain of Medas products in the key respiratory area (asthma and allergy), resulting in a negative effect on Medas sales.
SALES OF MEDA PRODUCTS THAT ARE PROTECTED BY PATENTS MAY BE NEGATIVELY IMPACTED BY COMPETITION FROM GENERIC PRODUCTS ONCE THE PATENTS EXPIRE.
Generic products are drugs which contain the same active substance or substances as the original drug product whose patent has expired.
Expirations of patents and increased price competition from generic products competing with Medas products may result in negative commercial and financial effects for Meda.
AN INCREASE IN PARALLEL TRADE MAY HAVE NEGATIVE COMMERCIAL AND FINANCIAL EFFECTS FOR MEDA.
Differences in the price of pharmaceuticals in markets where Meda operates may lead to an increase in parallel imports, with Medas products being
purchased at a lower price in certain markets and then competing with Medas sales in other markets. Increased parallel trade may result in negative commercial and financial effects for Meda.
THERE IS A RISK THAT NEW PRODUCT LAUNCHES OR LAUNCHES OF EXISTING PRODUCTS IN NEW MARKETS WILL NOT SUCCEED, WHICH COULD NEGATIVELY IMPACT MEDAS
EXPECTED EARNINGS AND FINANCIAL POSITION.
Launching a new drug takes time and involves considerable investments in marketing, stocking of products
before launch, as well as other types of costs. The success of new products is of particular importance for Meda because new product launches are intended to contribute to Medas organic growth. There is a risk that new product launches will
not succeed for various reasons, including inability to demonstrate a differentiated profile for the product or the undermining of intellectual property rights. New products or product launches that are not successful might have a negative impact on
Medas expected earnings and financial position.
Success when establishing existing products in new markets is also of importance for Meda. There is
a risk that the launch of existing products in new markets will not succeed for various reasons, including inability to correctly identify and utilize relevant sales and marketing opportunities for the product, inability to create a differentiated
profile for the product and the undermining of intellectual property rights. Unsuccessful launches of existing products in new markets may have a negative impact on Medas expected earnings and financial position.
MEDAS SALES AND EARNINGS MAY BE NEGATIVELY IMPACTED IF MEDAS BUSINESS PARTNERS DO NOT MEET THEIR OBLIGATIONS UNDER THEIR PARTNERSHIP AND/OR
LICENSE AGREEMENTS.
Meda actively collaborates in marketing, sales and development with other pharmaceutical companies. The companies Meda enters
into partnership and/or license agreements with may not meet their obligations under such agreements. Their failure to do so could have a negative impact on Medas sales and earnings. There is also
36
a risk that Meda will not be able to enter into partnership and/or license agreements on terms that are acceptable to Meda in the future, which could have a negative impact on Medas sales
and earnings.
THERE CAN BE NO GUARANTEE THAT CLINICAL TRIALS WILL RESULT IN MEDA RECEIVING THE REQUISITE APPROVAL FROM AUTHORITIES OR LEAD TO NEW
PRODUCTS THAT CAN BE SOLD ON THE MARKET, EITHER OF WHICH MAY NEGATIVELY AFFECT MEDAS EXPECTED SALES, EARNINGS AND FINANCIAL POSITION.
Prior
to the sale of certain new products, Meda or its partners must demonstrate the potential products safety and efficacy for humans. There can be no guarantee that clinical trials or other studies conducted by Meda or its partners will
demonstrate the level of safety and efficacy necessary to receive the requisite approval from the authorities, or that they will result in products that can be sold on the market, either of which may negatively affect Medas expected sales,
earnings and financial position.
DISRUPTIONS IN MEDAS MANUFACTURING OPERATIONS FOR ITS PRODUCTS MAY NEGATIVELY IMPACT EARNINGS AS MEDAS
ABILITY TO MANUFACTURE SUFFICIENT VOLUMES OF PRODUCTS TO MEET DEMAND MAY BE IMPAIRED.
Medas manufacturing operations for its products
consists of a chain of processes, where interruptions or disruptions at any stage could impact Medas ability to manufacture sufficient volumes of products to meet the demand. Such interruptions could have a negative impact on Medas
operations, financial position and earnings.
COMPETITION FOR EXPERIENCED EMPLOYEES CAN BE INTENSE, AND AN INABILITY TO ATTRACT AND RETAIN KEY
EMPLOYEES MAY NEGATIVELY IMPACT MEDAS BUSINESS, FINANCIAL POSITION AND EARNINGS.
Meda is highly dependent on a number of key employees. The
loss of one or more of these individuals could have negative financial and commercial implications for Meda. Medas ability to recruit and retain qualified employees is of utmost importance in order to secure the appropriate level of expertise
within Meda. Given the intense competition for experienced employees among pharmaceutical companies, there is a risk of losing key employees, which could have a negative impact on Medas operations, financial position and earnings.
PRODUCT LIABILITY CLAIMS FOR DAMAGES BROUGHT AGAINST MEDA MAY NEGATIVELY AFFECT MEDAS OPERATIONS AND PROFITABILITY.
Product development, clinical trials, production, sales and marketing of Medas products are subject to product liability risk. Although Meda has product
liability insurance protection, there is a risk that Medas insurance will not fully cover claims for liability for damages relating to the use of its products. This could negatively affect Medas operations and profitability.
MEDA MAY BE UNSUCCESSFUL IN PREVENTING INFRINGEMENT OF ITS INTELLECTUAL PROPERTY RIGHTS OR MAY BE HELD LIABLE FOR INFRINGEMENT OF OTHERS
INTELLECTUAL PROPERTY RIGHTS, EITHER OF WHICH COULD HAVE A NEGATIVE IMPACT ON MEDAS OPERATIONS AND PROFITABILITY.
Meda invests significant
sums in product development and acquires intellectual property developed by other companies. In order to support a return on these investments, Meda actively asserts its intellectual property rights and closely monitors the activities of its
competitors, including competitors possession of intellectual property rights. However, there is a risk that Medas rights could be infringed upon. Should this occur, there is a risk that Meda would be unable to assert its rights to the
extent expected in legal proceedings, because the scope of protection is considered to be too narrow, because Medas rights are considered invalid or for other reasons, which could have a negative impact on Medas operations and
profitability.
37
There is a risk that Medas products and/or trademarks will be alleged or deemed to infringe on the rights
of others. Thus, Meda may be drawn into court proceedings for alleged infringement of the rights of others. If this happens, there is a risk that Meda may be liable to pay significant damages, which would have a negative impact on Medas
operations and profitability.
Furthermore, Meda is dependent on know-how and it cannot be ruled out that competitors may develop similar know-how, or
that Meda will be unable to protect its know-how effectively, which may negatively affect Medas operations and profitability.
ANY POSSIBLE
VIOLATIONS OF MEDAS INTERNAL COMPLIANCE POLICIES AND GUIDELINES OR CODE OF CONDUCT FOR SUPPLIERS MAY HAVE SIGNIFICANT NEGATIVE EFFECTS ON MEDAS OPERATIONS AND BRAND.
Meda has adopted various internal compliance policies and guidelines as well as a code of conduct for suppliers, focusing inter alia on responsible business
practices, environmental management and anti-corruption. Any possible violations of such policies and guidelines or applicable anti-corruption laws, anti-money laundering laws and/or similar laws applicable to Meda may have significant negative
effects on Medas expected sales, earnings, financial position and brand.
MEDA MAY BE UNABLE TO CONTINUE TO SECURE FINANCING ON AGREEABLE
TERMS AND A SUDDEN CHANGE IN MEDAS LIQUIDITY COULD IMPEDE ITS ABILITY TO FULFILL EXISTING PAYMENT OBLIGATIONS AS THEY BECOME DUE.
The
ability of Meda to meet future capital needs is to a large extent depending on the successful sale of Medas products. In order to finance acquisitions of companies, acquisitions of product rights or other measures undertaken to achieve
strategic objectives, the future operations of Meda may need additional financial resources. There is a risk that Meda will not be able to secure necessary capital to be able to meet its payment obligations when due or to finance acquisitions of
companies, acquisitions of product rights or other measures undertaken to achieve strategic objectives. In this respect, general developments in the capital and credit markets are also of significant importance and may adversely affect Meda.
Moreover, Meda may need to incur additional indebtedness in order to refinance existing indebtedness as it matures or comes due. As of December 31, 2015,
Meda had SEK 24.9 billion of total borrowings outstanding, including SEK 2.4 billion of short-term borrowings. There is a risk that Meda will not be able to procure sufficient funds to refinance its indebtedness as it comes due or that financing
will only be obtainable on undesirable commercial terms. In addition, there is a risk that Meda may default on or otherwise breach the terms of its existing financial obligations due to, among other things, changes in the general economy or
disruptions in the capital and credit markets. Such a default or breach could negatively affect Medas financial position and earnings.
FAILURE TO NEGOTIATE ADEQUATE CONTRACTUAL PROTECTIONS IN CONNECTION WITH ACQUISITIONS OR FAILURE TO INTEGRATE ACQUIRED COMPANIES FOLLOWING AN
ACQUISITION MAY NEGATIVELY AFFECT MEDAS SALES, EARNINGS AND FINANCIAL POSITION.
In connection with acquisitions, all of the acquired
companys liabilities, as well as its assets may be transferred. There is a risk that not all actual or potential liabilities of the acquired company are identified prior to the acquisition and/or that no representations, warranties or
indemnities covering such liabilities are obtained. If Meda is unable to obtain contractual protection regarding such liabilities, this could adversely affect Medas business and profitability.
Acquisitions generally involve risks related to integration. Apart from company specific risks, the acquired companys relationships with key
individuals, customers and suppliers may be negatively affected. There is also
38
a risk of integration processes taking longer or being more costly than estimated. Similarly, there is a risk that expected synergies do not occur, either completely or in part. The integration
of acquisitions may involve organizational changes which, in the short term, could cause delays of the implementation of plans and achievement of objectives. Pharmaceutical companies are knowledge-based companies, and accordingly, integration
normally involves risks relating to the ability to retain expertise and to create a common culture, among other risks. If Meda does not succeed in integrating acquired businesses, or if these businesses, after integration, do not perform as
expected, this may negatively affect Medas expected sales, earnings and financial position.
MEDA MAY BE UNABLE TO GOVERN AND CONTROL ITS
EXPANDED OPERATIONS EFFECTIVELY, WHICH MAY NEGATIVELY AFFECT MEDAS OPERATIONS AND EARNINGS.
With continued expansion comes the risk that
Medas existing control, governance, accounting and information systems may prove to be inadequate for the planned growth and additional investment in these systems may be necessary. Medas potential inability to govern and control its
expanded operations effectively could have negative commercial and financial consequences for Meda.
A SIGNIFICANT REDUCTION IN MEDAS GOODWILL
MAY NEGATIVELY IMPACT ITS FINANCIAL POSITION.
Meda reports substantial value for goodwill and product rights. Goodwill is the only intangible
asset that is reported based on indefinite useful life. Impairment testing is done on an ongoing basis. Significant reduction in value may arise in the future for a variety of reasons, such as unfavorable market conditions that either affect Meda
specifically or the entire pharmaceutical industry more generally. This may result in negative effects on Medas earnings and financial position.
MEDA ENGAGES IN CURRENCY HEDGING TO MITIGATE THE RISKS OF OPERATING IN MANY DIFFERENT CURRENCIES, BUT THERE CAN BE NO GUARANTEE THAT THESE CURRENCY
HEDGES WILL PROVIDE COMPLETE PROTECTION AGAINST EXCHANGE RATE FLUCTUATIONS, WHICH MAY HAVE A NEGATIVE IMPACT ON MEDAS SALES AND OPERATING PROFIT.
A significant part of Medas purchasing and sales occurs in currencies other than SEK. Consequently, exchange rate fluctuations will affect Medas
net profit and cash flow. A large part of Medas operations are conducted in subsidiaries outside of Sweden in accounting currencies other than SEK. There is a risk that Medas currency hedges (if any) will not provide complete protection
against exchange rate fluctuations, which may have a negative impact on Medas sales and operating profit.
IF MEDA IS UNABLE TO MINIMIZE
INTEREST RATE RISK USING INTEREST RATE SWAPS OR OTHER MEANS, CHANGES IN INTEREST RATES MAY HAVE A NEGATIVE EFFECT ON MEDAS FINANCIAL POSITION.
Medas financing consists in large part of interest-bearing liabilities, which means that Medas net earnings are affected by changes in general
interest rates. How quickly a change in interest rates will have an impact on Medas net profits depends in part on the loans fixed interest rate period. To some extent Meda uses interest rate swaps to extend or shorten the fixed interest
rate period on underlying loans. If Medas actions to minimize interest rate risk are not effective, changes in interest rates may have a negative impact on Medas financial position.
CREDIT RISKS RELATED TO FINANCIAL TRANSACTIONS MAY NEGATIVELY IMPACT MEDAS BUSINESS.
Medas financial transactions may lead to credit risks in relation to financial counterparties. Credit risk exists in Medas cash and cash
equivalents, derivatives, and cash balances with banks and financial institutions and in
39
relation to distributors and wholesalers, including outstanding receivables and committed transactions. If Medas actions to minimize credit risks are not sufficient, it may have a negative
impact on Medas financial position and earnings.
MEDAS PREVIOUS OR CURRENT TAX POSITION MAY CHANGE, WHICH MAY NEGATIVELY IMPACT
MEDAS OPERATIONS, EARNINGS AND FINANCIAL POSITION.
Meda is subject to taxation in a large number of countries. Moreover, Meda is from time
to time subject to tax investigation by tax authorities in different jurisdictions. Medas interpretation of tax regulations may be incorrect or legislations may be amended, potentially with retroactive effect. As a result of decisions from
Swedish and foreign tax authorities, Medas previous or current tax position may change, which may negatively affect Medas operations, earnings and financial position. Such decisions include, among others, a proposal for the introduction
of a new system of corporate taxation in Sweden intended to create a more neutral taxation of equity and borrowed capital that the so-called Corporate Tax Committee submitted to the Swedish government in June 2014, which is currently being reviewed
by the Swedish government.
MEDA MAY BE INVOLVED IN LEGAL PROCEEDINGS, THE MATERIAL COSTS OF WHICH COULD NEGATIVELY IMPACT MEDAS BUSINESS.
As a part of the ordinary course of business, Meda may be involved in litigation and legal proceedings which may be time-consuming, disturb
Medas day-to-day operations, involve significant expenses and financial claims against Meda and/or threaten important aspects of Medas operations. Any of these factors may result in material costs and negatively affect Medas
operations, earnings and financial position.
40
FORWARD-LOOKING STATEMENTS
This prospectus, and the documents incorporated herein by reference, contain forward-looking statements. Such forward-looking statements may
include, without limitation, statements about the proposed transaction to acquire Meda, the Offer, the EPD Transaction, the benefits and synergies of the EPD Transaction and the proposed transaction, future opportunities for Mylan, Meda, or the
Combined Company and products and any other statements regarding Mylans, Medas or the Combined Companys future operations, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities,
strategies, competition, and other expectations and targets for future periods. These may often be identified by the use of words such as will, may, could, should, would,
project, believe, anticipate, expect, plan, estimate, forecast, potential, intend, continue, target and variations of
these words or comparable words. Because forward-looking statements inherently involve risks and uncertainties, actual future results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to: uncertainties related to the proposed transaction, including as to the timing of the proposed transaction, uncertainties as to whether Mylan will be able to complete the proposed
transaction, the possibility that competing offers will be made, the possibility that certain conditions to the completion of the Offer will not be satisfied, and the possibility that Mylan will be unable to obtain regulatory approvals for the
proposed transaction or be required, as a condition to obtaining regulatory approvals, to accept conditions that could reduce the anticipated benefits of the proposed transaction; the ability to meet expectations regarding the accounting and tax
treatments of the EPD Transaction and the proposed transaction; changes in relevant tax and other laws, including but not limited to changes in healthcare and pharmaceutical laws and regulations in the U.S. and abroad; the integration of the EPD
Business and Meda being more difficult, time-consuming, or costly than expected; operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients, or
suppliers) being greater than expected following the EPD Transaction and the proposed transaction; the retention of certain key employees of the EPD Business and Meda being difficult; the possibility that Mylan may be unable to achieve expected
synergies and operating efficiencies in connection with the EPD Transaction and the proposed transaction within the expected time-frames or at all and to successfully integrate the EPD Business and Meda; expected or targeted future financial and
operating performance and results; the capacity to bring new products to market, including but not limited to where Mylan uses its business judgment and decides to manufacture, market, and/or sell products, directly or through third parties,
notwithstanding the fact that allegations of patent infringement(s) have not been finally resolved by the courts (i.e., an at-risk launch); any regulatory, legal, or other impediments to Mylans ability to bring new products to
market; success of clinical trials and Mylans ability to execute on new product opportunities; any changes in or difficulties with our inventory of, and our ability to manufacture and distribute, the EpiPen
®
Auto-Injector to meet anticipated demand; the scope, timing, and outcome of any ongoing legal proceedings and the impact of any such proceedings on financial condition, results of operations
and/or cash flows; the ability to protect intellectual property and preserve intellectual property rights; the effect of any changes in customer and supplier relationships and customer purchasing patterns; the ability to attract and retain key
personnel; changes in third-party relationships; the impact of competition; changes in the economic and financial conditions of the businesses of Mylan, Meda or the Combined Company; the inherent challenges, risks, and costs in identifying,
acquiring, and integrating complementary or strategic acquisitions of other companies, products or assets and in achieving anticipated synergies; uncertainties and matters beyond the control of management; and inherent uncertainties involved in the
estimates and judgments used in the preparation of financial statements, and the providing of estimates of financial measures, in accordance with U.S. GAAP and related standards or on an adjusted basis. For more detailed information on the risks and
uncertainties associated with Mylans business activities, see the risks described in Mylans Annual Report on Form 10-K for the year ended December 31, 2015 and its other filings with the SEC. These risks and uncertainties, as well
as other risks and uncertainties associated with Mylan, Meda and the Combined Company are also more fully discussed in the sections entitled Risk Factors Related to Mylan and the Offer and Risk Factors Related to Meda beginning on
pages 21 and 35 of this prospectus, respectively, and those risks and uncertainties that will be discussed in the Offer Document and the EU Prospectus. You can access Mylans filings with the SEC through the SEC website at www.sec.gov, and
Mylan strongly encourages
41
you to do so. Mylan undertakes no obligation to update any statements herein for revisions or changes after the date of this prospectus, except as required by law.
All subsequent written or oral forward-looking statements concerning the proposed transaction, the Offer, a compulsory acquisition or other matters addressed
in this prospectus and attributable to Mylan or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.
42
BACKGROUND AND REASONS FOR THE OFFER
Background of the Offer
During the past decade, Mylan has become a global leader in the pharmaceutical industryone with unprecedented scale in its operating platform, diversity
in its portfolio, and significant renown for the efficiency of its operations and the quality of its products. In addition to the cultivation of numerous organic growth drivers, a key aspect of its transformation and growth has been meaningful
participation in the ongoing consolidation of the global pharmaceutical industry and the completion of transactions accretive to adjusted earnings.
Mylan
has been highly active in evaluating quality companies and assets within the industry to identify those that would most effectively build on its operating platform and commercial presence, complement its existing strengths and capabilities, enhance
its financial flexibility, further strengthen its competitive position, promote the long-term sustainable success of Mylans business, enhance shareholder value and/or provide benefits to its other stakeholders, including employees, creditors,
customers, suppliers, relevant patient populations and communities in which Mylan operates.
In the spring of 2014, Robert J. Coury, Executive Chairman of
Mylan, engaged in discussions with Bert-Åke Eriksson, Chairman of the Meda Board at that time, and Dr. Jörg-Thomas Dierks, Chief Executive Officer of Meda, regarding a potential combination of Mylan and Meda. No agreement to
consummate a transaction was reached at that time.
On July 8, 2015, a representative of Meda invited Mylan to participate in a sales process
relating to the potential sale by Meda of its German contraceptive products (the Meda German Contraceptive Products). On August 7, 2015, Mylan and Meda
executed a confidentiality agreement related to the potential sale of the
Meda German Contraceptive Products. During the period from August 2015 through November 2015, representatives of Mylan conducted a due diligence investigation of the Meda German Contraceptive Products and engaged in discussions with representatives
of Meda and Medas advisors with respect thereto.
On August 29, 2015, Mr. Coury met with Dr. Dierks, Luca Rovati, Vice Chairman of
Fidim and Deputy Chairman of the Meda Board, and Sigieri Diaz Pallavicini, Fidims representative on Medas Nomination Committee, in Madrid, Spain to discuss, among other things, a potential acquisition of Meda by Mylan.
On September 3, 2015, a representative of Rothschild invited Mylan to participate in an auction process relating to the potential sale by Meda of Meda
Pharmaceuticals Inc., a subsidiary conducting Medas operations in the United States (the Meda U.S. Business). On September 23, 2015, Mylan and Meda executed a confidentiality agreement related to the potential sale of the Meda
U.S. Business. During the period from September 2015 through December 2015, representatives of Mylan and Mylans advisors conducted a due diligence investigation of the Meda U.S. Business and engaged in discussions with representatives of Meda
and Medas advisors with respect thereto, including a Meda U.S. Business management meeting in New York, New York on November 9, 2015 and an in-person site visit at a Meda U.S. Business facility on December 1, 2015.
On November 25, 2015, Mr. Coury and Mr. Rovati discussed by telephone a potential acquisition of Meda by Mylan. Between November 25, 2015
and December 1, 2015, Mr. Coury and Dr. Dierks had several conversations by email and telephone regarding a potential acquisition of Meda by Mylan and they agreed to meet in person to discuss the matter further.
On December 9, 2015, Mr. Coury met with Dr. Dierks in Rome, Italy. During their meeting, Mr. Coury expressed Mylans interest in
pursuing a potential acquisition of Meda as a whole (including the Meda U.S. Business) for a total purchase price of between SEK 165 and SEK 180 per Meda share, comprised of at least 80 percent cash and the remainder in Mylan Shares.
Later on December 9, 2015, Mr. Coury met with Mr. Rovati and Mr. Pallavicini in Rome, Italy. During their meeting, Mr. Coury
expressed Mylans interest in pursuing a potential acquisition of Meda on the terms discussed with Dr. Dierks earlier that day.
43
On December 10, 2015, Mr. Coury and Dr. Dierks discussed by telephone the potential acquisition of
Meda by Mylan. Dr. Dierks also informed Mr. Coury that Martin Svalstedt, Chairman of the Meda Board, and representatives of Stena, including Dan Sten Olsson, Chief Executive Officer of Stena, would be willing to meet with Mr. Coury to
discuss the potential transaction if Mr. Coury would be willing to revise Mylans initial proposed purchase price range of SEK 165-180 per Meda share to SEK 170-180 per Meda share. Mr. Coury agreed to do so and asked
Dr. Dierks to arrange that meeting.
On December 13, 2015, Mr. Coury and a representative of Cravath, Swaine & Moore LLP, legal
advisor to Mylan (Cravath), met with Mr. Svalstedt, Dr. Dierks, Mr. Olsson and Mr. Eriksson in Gothenburg, Sweden. During their meeting, Mr. Coury delivered to Mr. Svalstedt a non-binding indication of
interest letter on behalf of Mylan to the Meda Board, which confirmed Mylans interest in acquiring Meda (including the Meda U.S. Business) for a total purchase price of between SEK 170 and SEK 180 per Meda share, comprised of 80 percent
cash and 20 percent Mylan Shares. The letter indicated that such price was based on publicly available information and that Mylans interest in the potential transaction was based on the condition that the Meda Board publicly recommend
Mylans offer upon announcement and that both of Stena and Fidim support Mylans offer by providing irrevocable undertakings to accept the offer.
On December 14, 2015, Mr. Olsson sent an email to Mr. Coury indicating that Stenas desired purchase price was SEK 175 per Meda
share, comprised of SEK 136 in cash and SEK 39 in Mylan Shares. Mr. Coury sent a response email to Mr. Olsson indicating that the range of SEK 170 to SEK 180 per Meda share communicated by Mylan in its non-binding indication of
interest letter delivered on December 13, 2015 was based on publicly available information and that Mylan would not agree upon a specific price without conducting a due diligence investigation.
On December 15, 2015, Mr. Olsson sent an email to Mr. Coury indicating Stenas willingness to continue discussions on the basis of
Mylans proposed purchase price range of SEK 170 to SEK 180 per Meda share. Later that day, a representative of Cravath sent via email a preliminary list of due diligence requests to Dr. Dierks.
On December 16, 2015, Mr. Svalstedt sent a letter via email on behalf of the Meda Board to Mr. Coury stating that the Meda Board had determined
that Mylans letter dated December 13, 2015 provided a basis for further discussions as well as confirmatory due diligence. Mr. Svalstedt also included in his email a draft confidentiality agreement relating to an acquisition by Mylan
of Meda.
During the period from December 16, 2015 through December 23, 2015, representatives of Mylan and Meda and their respective advisors
discussed and negotiated the terms of the confidentiality agreement, and Mylan and Meda executed the confidentiality agreement on December 24, 2015.
On December 17, 2015, representatives of Mylan, Meda, Cravath and Mannheimer Swartling Advokatbyrå, legal advisor to Meda (Mannheimer),
convened a conference call to discuss the scope of due diligence items that would be provided by Meda to Mylan.
On December 29, 2015, Meda provided
representatives of Mylan and Mylans advisors with access to documents in an electronic data room for purposes of facilitating Mylans due diligence investigation.
On January 7, 2016, Meda provided certain unaudited internal budget information prepared by Medas management relating to fiscal years 2016 through
2018 to representatives of Mylan and Mylans advisors.
On January 8, 2016, the Mylan Board held a meeting in London, United Kingdom to review
and consider the approval of the potential acquisition of Meda by Mylan. After a comprehensive review and discussion conducted in consultation with its financial and legal advisors, the Mylan Board determined to approve the potential acquisition,
subject to (1) confirmation that the Meda Board would issue a public recommendation of Mylans offer upon Mylans announcement thereof, (2) delivery of executed irrevocable undertakings to accept the offer
44
and shareholder agreements by each of Stena and Fidim in a form acceptable to Mylan and (3) completion of Mylans due diligence investigation to the satisfaction of Mylan.
Later on January 8, 2016, Mr. Coury called Mr. Svalstedt and explained that, based on Mylans due diligence investigation conducted to
that point, Mylans proposed purchase price was expected to be SEK 160 per Meda share. Mr. Svalstedt and Mr. Coury agreed to meet in person to discuss further.
On January 10, 2016, Mr. Coury met with Mr. Svalstedt and Dr. Dierks in Frankfurt, Germany to discuss the potential transaction and
Mylans proposed purchase price. Messrs. Coury, Svalstedt and Dierks agreed to continue discussions regarding the potential transaction on the basis of a proposed purchase price of SEK 165 per Meda share, subject to the completion of
Mylans due diligence investigation.
On January 17, 2016, Meda suspended Mylans access to the electronic data room, pending the
completion of management meetings and a reaffirmation of Mylans interest in the potential acquisition of Meda at a purchase price that would be acceptable to Meda.
On January 18, 2016, January 19, 2016 and January 20, 2016, representatives of Meda hosted management meetings in Frankfurt, Germany in
order to make presentations to representatives of Mylan and Mylans advisors and answer questions relating to Mylans due diligence investigation.
Between January 18, 2016 and January 21, 2016, Mr. Coury, Heather Bresch, Chief Executive Officer of Mylan, Mr. Svalstedt and
Dr. Dierks, along with other representatives of Mylan and Meda and representatives of Centerview Partners, Rothschild, Cravath and Mannheimer, held several in-person meetings in Frankfurt, Germany and discussions by telephone relating to the
potential transaction and the amount and structure of the potential offer consideration.
On January 21, 2016, Mr. Coury delivered a term sheet
to Mr. Svalstedt outlining a proposed consideration structure pursuant to which Meda shareholders would receive a fixed value of SEK 165 per Meda share, consisting of 80 percent in cash and 20 percent in Mylan Shares, subject to
Mylans option to adjust the mix of consideration in the event of a decline in the price of Mylan Shares between the announcement of the offer and the closing of the offer.
On January 21, 2016, Meda reinstated Mylans access to the electronic data room and began uploading additional documents in response to follow-up
due diligence requests by Mylan and Mylans advisors. During the period from January 21, 2016 to February 10, 2016, Mylan and its advisors continued the due diligence investigation of Meda.
On January 21, 2016, a representative of Cravath sent to representatives of Mannheimer and Rothschild an initial draft of a form of irrevocable
undertaking to accept Mylans offer to be executed by each of Stena and Fidim. Between January 21, 2016 and February 10, 2016, representatives of Mylan, Stena, Fidim, Cravath, Mannheimer and Rothschild discussed and negotiated the
terms of the Stena Irrevocable Undertaking and the Fidim Irrevocable Undertaking.
On January 28, 2016, a representative of Cravath sent to
representatives of Mannheimer and Rothschild an initial draft of a form of shareholder agreement to be executed by each of Stena and Fidim. Between January 28, 2016 and February 10, 2016, representatives of Mylan, Stena, Fidim, Cravath,
Mannheimer and Rothschild discussed and negotiated the terms of the Stena Shareholder Agreement and the Fidim Shareholder Agreement.
Between
January 25, 2016 and January 29, 2016, representatives of Mylan conducted in-person site visits at certain of Medas facilities.
On
February 3, 2016 and February 4, 2016, representatives of Mylan, Meda, Centerview Partners, Rothschild, Cravath and Mannheimer convened several in-person meetings in London, United Kingdom and held several conversations by telephone to
discuss and negotiate the terms of the potential transaction.
45
On February 4, 2016, a representative of Cravath sent to representatives of Meda, Mannheimer and Rothschild
a draft offer announcement press release. Between February 4, 2016 and February 10, 2016, representatives of Mylan, Meda, Cravath, Mannheimer and Rothschild discussed and negotiated the terms of the final Offer announcement press release.
On February 5, 2016, the Mylan Board held a meeting in London, United Kingdom to discuss, among other things, Mylans financial results with
respect to the year and quarter ended December 31, 2015, and to update the review of the potential acquisition of Meda. After a comprehensive review and discussion conducted in consultation with its financial and legal advisors, the Mylan Board
reaffirmed and ratified the approval granted at its meeting on January 8, 2016, subject to (1) confirmation that the Meda Board would issue a public recommendation of Mylans offer upon Mylans announcement thereof,
(2) delivery of executed irrevocable undertakings to accept the offer and shareholder agreements by each of Stena and Fidim in a form acceptable to Mylan and (3) completion of the remaining items in Mylans due diligence investigation
to the satisfaction of Mylan.
During the period from February 5, 2016 through February 10, 2016, representatives of Mylan, Meda, Stena, Fidim,
Cravath, Advokatfirman Vinge KB, Swedish legal advisor to Mylan (Vinge), Mannheimer, Centerview Partners and Rothschild engaged in several discussions to negotiate the final terms of the potential transaction.
On February 9, 2016, Mr. Coury and Mr. Svalstedt engaged in several discussions with respect to the potential offer and the amount and
structure of the offer consideration. Later on February 9, 2016, Mr. Coury delivered a letter to Mr. Svalstedt on behalf of Mylan to the Meda Board that, among other things, indicated that the Mylan Board was supportive of the
potential offer and had unanimously authorized Mylan to proceed with the Offer on the terms (including the amount and structure of the Offer consideration) as described in this prospectus, subject to (1) confirmation by the Meda Board that it
would issue a public recommendation of the Offer upon Mylans announcement of the Offer and (2) delivery of the Stena Irrevocable Undertaking and the Stena Shareholder Agreement each executed by Stena and delivery of the Fidim Irrevocable
Undertaking and the Fidim Shareholder Agreement each executed by Fidim.
Also on February 9, 2016, a representative of Mannheimer sent to
representatives of Cravath a draft Meda Board recommendation press release. On February 9, 2016 and February 10, 2016, representatives of Mylan, Meda, Cravath, Vinge and Mannheimer discussed and revised the text of the final Meda Board
recommendation press release.
During the course of the day on February 10, 2016, all documentation relating to the transaction was finalized and the
following agreements were executed: (1) Mylan and Stena executed the Stena Irrevocable Undertaking and the Stena Shareholder Agreement, (2) Mylan and Fidim executed the Fidim Irrevocable Undertaking and the Fidim Shareholder Agreement and
(3) Mylan, Mylan Inc., Deutsche Bank AG Cayman Islands Branch, Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC executed the Bridge Credit Agreement to finance the cash portion of the Offer consideration.
Shortly after the close of trading on NASDAQ on February 10, 2016, Mylan issued the final Offer announcement press release and Meda issued the final Meda
Board recommendation press release.
Mylans Reasons for the Offer
Mylan has been highly active in evaluating major assets within the industry to identify those that would most effectively build on its operating platform and
commercial presence, complement its existing strengths and capabilities, enhance its financial flexibility, strengthen its competitive position, deliver additional shareholder value and offer substantial benefits to Mylans other stakeholders.
In furtherance of this strategy, Mylan identified Meda as a unique and strategic asset, with a high quality workforce which will add to Mylans
powerful, diversified and sustainable global platform. After careful consideration and deliberation, the Mylan Board unanimously approved the proposed acquisition of Meda.
46
In arriving at its determination, the Mylan Board consulted with Mylans management, legal counsel, and
financial advisor, reviewed a significant amount of information, considered a number of factors in its deliberations described above, and concluded that the proposed acquisition of Meda is likely to result in significant strategic and financial
benefits to Mylan for the reasons discussed below:
|
|
|
The Combined Company will be a global pharmaceutical leader that is more diversified and has a stronger presence across geographies, therapeutic categories and channels and more breadth, scale and diversity to drive
durable growth for the long term.
|
|
|
|
Following completion of the transaction, the Combined Company will have an enhanced financial profile with approximately $11.8 billion in combined 2015 sales and combined 2015 adjusted EBITDA of approximately $3.8
billion. The sum of 2015 U.S. GAAP net earnings attributable to Mylan N.V. and Medas 2015 IFRS operating profit would have been approximately $1.2 billion.
1
|
|
|
|
The Combined Company will have a balanced portfolio of more than 2,000 products across the branded/specialty, generics and OTC segments, sold in more than 165 markets around the world.
|
|
|
|
The transaction will build on Mylans recent acquisition of the EPD Business to create an unparalleled European platform for growthone that is well-positioned to succeed in this dynamic and challenging
region. The transaction also consolidates EpiPen
®
Auto-Injector in Europe, providing greater opportunities to build the brand in this region.
|
|
|
|
The transaction delivers on Mylans long-stated commitment to develop a substantial presence in the OTC segment, by creating an approximately $1 billion global OTC business at close.
|
|
|
|
Mylans and Medas complementary therapeutic presence will create a scale player in respiratory / allergy, dermatology and pain products, providing greater opportunities for growth in these areas and
maximizing the potential of future product launches.
|
|
|
|
By offering one of the industrys broadest portfolios of products across all customer channels (e.g., specialty, generics and OTC), the Combined Company will be well-positioned to deliver greater value to
customers, which is increasingly important in light of the evolving payor and distributor environment. The combined portfolio will be supported by an expansive global commercial infrastructure, with sales representatives operating in 60 countries.
The Combined Company will retain significant control over its supply chain, operating one of the industrys most extensive and highest-quality manufacturing and research and development platforms with approximately 60 facilities.
|
|
|
|
Substantial pre-tax annual operational synergies of approximately $350 million by year four after completion of the Offer are expected to be realized as a result of savings associated with integration and optimization
across cost components and functions, and through leveraging opportunities of the combined commercial platform. Components of these synergies include: (1) optimization of the combined commercial platform, (2) optimization of cost of goods sold
through world-class supply chain, vertical integration and global sourcing excellence, (3) elimination of redundant general and administrative costs, including public company costs, and (4) cross-fertilization opportunities of the combined
product portfolio.
|
|
|
|
The transaction is expected to be immediately accretive to Mylan adjusted earnings, with accretion to adjusted earnings increasing significantly after the first full year (2017) as synergies are realized. The
transaction creates an opportunity to achieve $0.35 to $0.40 adjusted diluted EPS accretion in 2017
|
1
|
Combined Company figures represent an aggregation of Mylan figures derived from financial information prepared in accordance with U.S. GAAP and Meda figures derived from financial information prepared in accordance with
IFRS as issued by the IASB and do not reflect pro forma adjustments (including no elimination of transactions between Mylan and Meda). See Appendix III to this prospectus for a quantitative reconciliation of the stated historical non-GAAP measure,
combined 2015 adjusted EBITDA of approximately $3.8 billion, to the most directly comparable U.S. GAAP and IFRS measures, 2015 U.S. GAAP net earnings attributable to Mylan N.V. and Medas 2015 IFRS operating profit.
|
47
|
and to accelerate achievement of Mylans previously stated $6.00 in adjusted diluted EPS target in 2017 versus 2018.
2
However, the
transaction is not expected to be immediately accretive on a U.S. GAAP basis.
3
|
|
|
|
Mylans pro forma leverage at close is expected to be approximately 3.8x debt-to-adjusted EBITDA, and the significant adjusted free cash flows generated by the Combined Company will allow for rapid deleveraging. As
a result, Mylan will retain ample financial flexibility to pursue additional external opportunities. Based upon historical levels of operating cash flow for Mylan and Meda, the Combined Company is expected to generate significant operating cash flow
on a U.S. GAAP basis.
4
|
The Mylan Board believes that the Offer is compelling given
that:
|
|
|
the Offer consideration represents a meaningful premium for Meda shareholders;
|
|
|
|
the total enterprise value of the Offer for all Meda shares, including Meda net debt, was approximately SEK 83.6 billion or $9.9 billion at announcement;
|
|
|
|
if the Offer is completed, Meda shareholders will become shareholders of Mylan, which has a clear track record of creating shareholder value, with an annualized five year total shareholder return of approximately 20.7
percent
5
; and
|
|
|
|
the Offer is fully financed and not conditional on further due diligence.
|
|
|
|
In addition to the compelling value to Meda shareholders, the Mylan Board believes that the proposed acquisition of Meda would offer substantial benefits to the other stakeholders of both companies:
|
|
|
|
the proposed acquisition of Meda will provide a broader variety of opportunities to employees of the Combined Company;
|
|
|
|
the position of creditors, customers and suppliers will be enhanced by the Combined Companys scale and significant cash flows; and
|
|
|
|
patients will receive improved access to high-quality medicine through increased scale across geographies and robust capabilities to drive innovation.
|
The Mylan Board weighed these factors and the anticipated benefits of the proposed acquisition of Meda against a number of uncertainties, risks, and
potentially negative factors relevant to the proposed acquisition of Meda, including risks of the type and nature described under the sections entitled Risk Factors Related to Mylan and the Offer, Risk Factors Related to Meda
and Forward-Looking Statements beginning on pages 21, 35 and 41 of this prospectus, respectively, including:
|
|
|
The value of the share portion of the Offer consideration is dependent on the market price of Mylan Shares. Because the market price of Mylan Shares and the exchange rate between USD and SEK may fluctuate, the market
value of the Mylan Shares that will be issued in connection with the Offer may fluctuate;
|
2
|
Stated 2017 opportunity/2018 target; this is a long-term target only and does not represent company guidance.
|
3
|
See Appendix III of this prospectus for a qualitative reconciliation of the stated forward-looking non-GAAP measures, pro forma adjusted earnings and opportunity to achieve $0.35 to $0.40 adjusted diluted EPS accretion
in 2017, to their most directly comparable U.S. GAAP measures, U.S. GAAP net earnings attributable to Mylan N.V. and U.S. GAAP diluted earnings per share, respectively.
|
4
|
See Appendix III of this prospectus for qualitative reconciliations of the stated forward-looking non-GAAP financial measures, pro forma leverage at close of 3.8x debt-to-adjusted EBITDA and pro forma adjusted free cash
flow, to the most directly comparable U.S. GAAP measures, pro forma U.S. GAAP debt to pro forma LTM U.S. GAAP net earnings attributable to Mylan N.V. at close and U.S. GAAP net cash provided by operating activities, respectively.
|
5
|
Total shareholder return data is from Bloomberg and reflects total return (including price appreciation and reinvested dividends) as of December 31, 2015.
|
48
|
|
|
The Offer may not be completed on the terms or timeline currently contemplated, or at all;
|
|
|
|
The Offer may adversely affect the liquidity and value of non-tendered Meda shares;
|
|
|
|
Holders of Meda shares that do not accept the Offer and whose Meda shares are acquired by Mylan in the compulsory acquisition procedure may not receive payment for a significant period of time after completion of the
Offer;
|
|
|
|
Mylan must obtain required approvals and consents to consummate the Offer, which, if delayed or not granted, may jeopardize or delay the completion of the Offer, result in additional expenditures of money and resources,
and/or reduce the anticipated benefits of the Offer;
|
|
|
|
The market price of Mylan Shares after the Offer may be affected by factors different from those currently affecting Meda shares;
|
|
|
|
The market for Mylan Shares may be adversely affected by the issuance of Mylan Shares pursuant to the Offer;
|
|
|
|
The Mylan Shares to be received by Meda shareholders in connection with the Offer will have different rights from the Meda shares;
|
|
|
|
The primary listing of the Mylan Shares is in the U.S. which may expose non-U.S. shareholders to additional risks;
|
|
|
|
Mylan does not anticipate paying dividends for the foreseeable future, and Meda shareholders who receive Mylan Shares in connection with the Offer must rely on increases in the trading price of Mylan Shares to obtain a
return on their investment;
|
|
|
|
Dual affiliation with securities depositories may entail logistical and technical challenges for shareholders whose shares are registered with Euroclear;
|
|
|
|
Meda shareholders will have a reduced ownership and voting interest after the completion of the Offer and a compulsory acquisition and will exercise less influence over the management and policies of Mylan than they do
over Meda;
|
|
|
|
Each of Stena and Fidim may have interests in the Offer that may be different from, or in addition to, the interests of the other Meda shareholders;
|
|
|
|
Mylan will incur significant transaction-related costs in connection with the Offer, which could have a material adverse effect on Mylans business, financial condition, results of operations, cash flows and/or
share price;
|
|
|
|
The business relationships of Mylan and Meda, including customer relationships, may be subject to disruption due to uncertainty associated with the Offer;
|
|
|
|
If counterparties to certain agreements with Meda, including certain debt agreements, do not consent, change of control rights under those agreements may be triggered as a result of the Offer, which could cause the
Combined Company to lose the benefit of such agreements and incur material liabilities or replacement costs;
|
|
|
|
The Offer, if successful, will trigger provisions contained in certain of Medas employee benefit plans and agreements that will require Mylan to make change in control payments;
|
|
|
|
If completed, the Offer may not achieve the intended benefits or may disrupt Mylans plans and operations;
|
|
|
|
If goodwill or other intangible assets that Mylan records in connection with the Offer and a compulsory acquisition become impaired, Mylan could have to take significant charges against earnings;
|
|
|
|
An inability to identify or successfully bid for suitable acquisition targets, or consummate and effectively integrate recent and future potential acquisitions, or to effectively deal with and respond to unsolicited
business proposals, could limit Mylans future growth and have a material adverse effect on Mylans business, financial condition, results of operations, cash flows, and/or share price;
|
49
|
|
|
Mylans actual financial condition and results of operations may differ materially from the unaudited pro forma financial information included in the Offer Document;
|
|
|
|
Mylan will need to timely and effectively implement its internal controls over Medas operations as required under the Sarbanes-Oxley Act of 2002;
|
|
|
|
While Mylan currently expects the Offer to be immediately accretive to its adjusted annual earnings per share following its completion, a decrease or delay in the expected accretive effect of the Offer to Mylans
annual adjusted earnings per share may negatively affect the market price of Mylan Shares;
|
|
|
|
Mylan will incur a substantial amount of indebtedness to acquire the Meda shares pursuant to the Offer and a compulsory acquisition;
|
|
|
|
Disruption in the financial markets could affect Mylans ability to refinance the Bridge Credit Facility on favorable terms, or at all;
|
|
|
|
Mylan will have significant additional indebtedness which could adversely affect Mylans financial condition, prevent Mylan from fulfilling its obligations with respect to such indebtedness and impose other
financial and operating restrictions on Mylan. Any refinancing of this debt could bear significantly higher interest rates; and
|
|
|
|
Loss of key personnel could lead to loss of customers, business disruption, and a decline in revenues, adversely affect the progress of pipeline products, or otherwise adversely affect the operations of Mylan.
|
The Mylan Board concluded that the potential benefits that it expected Mylan would achieve as a result of the proposed acquisition of Meda
outweighed the uncertainties, risks, and potentially negative factors relevant to the proposed acquisition of Meda.
This discussion of the information
and factors considered by the Mylan Board includes the principal positive and negative factors considered by the Mylan Board, but is not intended to be exhaustive and may not include all of the factors considered by the Mylan Board. In view of the
wide variety of factors considered in connection with its evaluation of the proposed acquisition of Meda, and the complexity of these matters, the Mylan Board did not find it useful and did not attempt to quantify or assign any relative or specific
weights to the various factors that it considered in reaching its determination to approve the proposed acquisition of Meda. Rather, the Mylan Board viewed its decisions as being based on the totality of the information presented to it and the
factors it considered. In addition, individual members of the Mylan Board may have given differing weights to different factors.
The information
presented in this section is forward looking in nature and, therefore, you should read it in light of the factors discussed in the section of this prospectus entitled Forward-Looking Statements beginning on page 41.
Recommendation of the Meda Board
The Meda Boards recommendation of the Offer is based on an assessment of a number of factors that the Meda Board has considered relevant in relation to
the evaluation of the Offer. These factors include, but are not limited to, Medas present position, the expected future development of Meda and thereto related possibilities and risks.
In the Meda Boards opinion, Meda has a well-defined and viable strategy going forward, notably in relation to further organic growth of the Dymista
®
franchise both in Europe and the U.S., a strong and growing presence in emerging markets and further margin expansion following the integration of the Rottapharm business. However, the Meda Board
views a combination of Meda and Mylan as positive and believes it to be strategically merited in a rapidly consolidating market, and the share consideration will further enable Medas shareholders to benefit from the combined accelerated growth
story and combination benefits.
50
Furthermore, these benefits enable Meda to address certain risks associated with Medas current prospects.
These risks include those associated with Medas scale in the U.S. market, which is not at critical mass, macroeconomic issues in selected economies and the inorganic growth of Meda.
The Meda Board believes that there are a number of strategic benefits to Meda from combining its operations with Mylan, including:
|
|
|
Significantly strengthens and diversifies commercial presence
|
|
|
|
Diversifies Medas global portfolio mix by strengthening branded platform and creates $1 billion business in attractive OTC market
|
|
|
|
Establishes critical mass across all commercial channels in Europe; creates a leading U.S. specialty business; and provides exciting platform for growth in new emerging markets
|
|
|
|
Enhances critical mass in key therapeutic areas
|
|
|
|
Complementary therapeutic presence in all regions will create a leader in allergy and respiratory and a scale player in dermatology, pain and gastrointestinal
|
|
|
|
Provides opportunity to sell combined portfolio in new markets
|
|
|
|
Financially compelling transaction
|
|
|
|
Enhances size and scale with combined 2015 sales of approximately $11.8 billion and combined 2015 adjusted EBITDA of approximately $3.8 billion
7
|
|
|
|
Substantial synergy opportunity, with approximately $350 million of pre-tax annual operational synergies expected to be achieved by year four after completion of the Offer
|
In addition, the Meda Board has taken into account a number of factors including, but not limited to, that the Offer represented at announcement a significant
premium to prevailing market prices for Meda shares, and that the Offer from Mylan is clearly superior to the non-binding indicative interest by Mylan in 2014.
Having concluded this assessment, the Meda Board believes that the terms of the Offer substantially recognize Medas growth prospects, as well as the
risks associated with those prospects.
When evaluating the Offer, the Meda Board also considered that shareholders representing approximately 30 percent
of shares and votes in Meda have undertaken to accept the Offer and the opinion of SEB Corporate Finance, dated February 10, 2016, to the Meda Board as to the fairness, from a financial point of view and as of such date, of the Offer
consideration to be received in the Offer by shareholders of Meda, which opinion was based on and subject to the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as more fully
described below under the caption Opinion of Medas Financial Advisor.
Based on the above, the Meda Board unanimously recommended that
the Meda shareholders accept the Offer.
8
7
|
Combined Company figures represent an aggregation of Mylan figures derived from financial information prepared in accordance with U.S. GAAP and Meda figures derived from financial information prepared in accordance with
IFRS as issued by the IASB and do not reflect pro forma adjustments (including no elimination of transactions between Mylan and Meda). See Appendix III to this prospectus for a quantitative reconciliation of the stated historical non-GAAP measure,
combined 2015 adjusted EBITDA of approximately $3.8 billion, to the most directly comparable U.S. GAAP and IFRS measures, 2015 U.S. GAAP net earnings attributable to Mylan N.V. and Medas 2015 IFRS operating profit.
|
8
|
Since each of Stena and Fidim has entered into an undertaking to tender its Meda shares in the Offer and a related shareholder agreement (see The OfferIrrevocable Undertakings to Accept the Offer;
Shareholder Agreements beginning on page 80 of this prospectus), Meda Board members Martin Svalstedt, Luca Rovati, Peter Claesson and Lars Westerberg did not participate in the Meda Boards decision to recommend the Offer. The other Meda
Board members who did participate in such decision unanimously recommended the Offer.
|
51
Opinion of Medas Financial Advisor
In connection with the Offer, the Meda Board requested that SEB Corporate Finance evaluate the fairness, from a financial point of view, of the Offer
consideration to be received in the Offer by shareholders of Meda. On February 10, 2016, at a meeting of the Meda Board held to evaluate the Offer, SEB Corporate Finance delivered an oral opinion, confirmed by delivery of a written opinion
dated February 10, 2016, to the Meda Board to the effect that, as of such date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken described
in its opinion, the Offer consideration to be received in the Offer by shareholders of Meda was fair, from a financial point of view, to such holders. The full text of SEB Corporate Finances written opinion, dated February 10, 2016, which
describes the various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken, is attached as Appendix I to this prospectus and is incorporated herein by reference. The description of SEB
Corporate Finances opinion set forth below is qualified in its entirety by reference to the full text of SEB Corporate Finances opinion. SEB Corporate Finances opinion stated that, as described to SEB Corporate Finance by the
management of Meda, pursuant to the terms of the Offer, the total implied value of the Offer consideration may not be less than SEK 152 (the Floor Value). For purposes of its analyses and opinion, SEB Corporate Finance assumed, with the
Meda Boards consent, that the Offer consideration will have, and the term Offer consideration refers to, a total implied value per Meda share equal to the Floor Value.
SEB Corporate Finances advisory services and opinion was provided for the information of and assistance to the Meda Board (in its capacity as such)
in connection with its consideration of the Offer consideration from a financial point of view and did not address any other aspects or implications of the Offer. SEB Corporate Finance was not requested to consider, and its opinion did not address,
the underlying business decision of Meda to effect the Offer, nor did SEB Corporate Finances opinion address the relative merits of the Offer as compared to any alternative business strategies that might exist for Meda, including whether any
other transaction would potentially be more favorable for the shareholders of Meda or the effect of any other transaction in which Meda might engage. SEB Corporate Finances opinion is not intended to be and does not constitute a recommendation
as to whether the shareholders of Meda should accept the Offer or how any such shareholder should act on any matters relating to the Offer or otherwise.
In connection with the presentation of its opinion, SEB Corporate Finance,
inter alia
, reviewed a draft, provided to SEB Corporate Finance on
February 9, 2016, of the Offer press release (including the terms and conditions of the Offer set out therein), certain publicly available and other business and financial information relating to Meda (including annual reports for the financial
years 2013 and 2014 and the interim report for the first nine months of 2015 and certain reports prepared by equity analysts) as well as certain financial forecasts and other information and data which were provided to or discussed with SEB
Corporate Finance by the management of Meda and that Meda directed SEB Corporate Finance to utilize for the purposes of its analyses (including extrapolations based on certain alternative assumptions provided by the management of Meda). In addition,
SEB Corporate Finance held discussions with the Chairman of the Meda Board and senior members of the management of Meda concerning the businesses, operations, financial position and prospects of Meda.
SEB Corporate Finance performed discounted cash flow analyses and Leveraged Buy-Out analyses of Meda. Furthermore, SEB Corporate Finance
considered certain financial and stock exchange related information regarding Meda in comparison with certain other companies with similar operations and other transactions that SEB Corporate Finance considered relevant in evaluating Meda and the
Offer. SEB Corporate Finance also reviewed the share price development and trading activity in Meda shares on Nasdaq Stockholm and performed such other analyses and studies as SEB Corporate Finance deemed appropriate as a basis for its opinion.
Given that the Offer consideration only consists of up to 20 percent of newly issued Mylan Shares, and since the share portion of the Offer consideration is
dependent on the Mylan Share price immediately before the Offer consideration will be paid, SEB Corporate Finances mandate did not include financial analyses or an opinion
52
relating to Mylan or the value of Mylan Shares. SEB Corporate Finance, however, reviewed certain publicly available business and financial information relating to Mylan (including certain reports
prepared by equity analysts) for the purposes of its opinion. In addition, SEB considered certain financial and stock exchange related information regarding Mylan in comparison with certain other companies with similar operations that SEB Corporate
Finance considered relevant in evaluating Mylan. SEB Corporate Finance also reviewed the share price development and trading activity in Mylan Shares on NASDAQ.
SEB Corporate Finance relied, without independent verification, upon the accuracy in all material aspects of all of the financial and other information and
data publicly available or provided to or otherwise reviewed by or discussed with SEB Corporate Finance and upon the assumption that no information of material importance to the evaluation of Medas future earnings capacity or for SEB Corporate
Finances assessment in general was omitted.
With respect to financial forecasts and other information and data provided to or otherwise reviewed by
or discussed with SEB Corporate Finance by the management of Meda, SEB Corporate Finance was advised by such management, and SEB Corporate Finance assumed, that such financial forecasts and other information and data (including extrapolations
thereto) were reasonably prepared on bases reflecting the best currently available estimates and judgments of such management as to the future financial performance of Meda and the other matters covered thereby. With respect to the publicly
available research analysts estimates relating to Meda reflected in such financial forecasts and other information and data and publicly available research analysts estimates relating to Mylan, SEB Corporate Finance assumed that they
reflected reasonable estimates and judgments as to, and were a reasonable basis upon which to evaluate, the future financial performance of Meda, Mylan and the other matters covered thereby. SEB Corporate Finance further assumed that the financial
results reflected in the financial forecasts and other information and data utilized in its analyses would be realized at the times and in the amounts projected. SEB Corporate Finance assumed that any adjustments, prorations or allocations of the
Offer consideration would not be meaningful in any material respect to its analyses or opinion.
SEB Corporate Finance did not conduct any due diligence
in order to verify the accuracy of received or reviewed information, and did not make any independent evaluation or assessment of the assets and liabilities (contingent, off-balance sheet or otherwise) of Meda, Mylan or any other entity. SEB
Corporate Finance did not make any physical inspection of the properties or assets of Meda, Mylan or any other entity. SEB Corporate Finance assumed that the Offer would be consummated in accordance with its terms and in compliance with all
applicable laws, documents and other requirements, without waiver, modification or amendment of any material term, condition or agreement, and that, in the course of obtaining the necessary governmental, regulatory or third party approvals,
consents, releases, waivers and agreements for the Offer, no delay, limitation, restriction or condition, including any divestiture requirements, amendments or modifications, would be imposed or occur that would be meaningful in any respect to SEB
Corporate Finances analyses or opinion. Representatives of Meda advised SEB Corporate Finance, and SEB Corporate Finance assumed, that the final terms and conditions of the Offer would not vary materially from those set forth in the draft of
the Offer press release reviewed by SEB Corporate Finance. SEB Corporate Finance did not express any opinion with respect to accounting, tax, regulatory, legal or similar matters and it relied upon the assessments of representatives of Meda as to
such matters.
SEB Corporate Finances opinion did not address any terms (other than the Offer consideration to the extent expressly specified
therein) or other aspects or implications of the Offer, including, without limitation, the form or structure of the Offer, the form of the Offer consideration or any terms, aspects or implications of any shareholders, non-competition,
non-solicitation, non-hire or non-disruption or other agreement, arrangement or understanding to be entered into in connection with or contemplated by the Offer or otherwise. SEB Corporate Finances assignment did not include expressing an
opinion on the underlying business decision of Meda to effect the Offer, the relative merits of the Offer as compared to any alternative business strategies that might exist for Meda, including whether any other transaction would potentially be more
favorable for the shareholders of Meda, or the effect of any other transaction in which Meda might engage. Furthermore, SEB Corporate Finance
53
was not asked by the Meda Board to, and it did not, participate in the negotiation or structuring of the Offer or explore the possibility of any offer from another party as regards Meda or any
part thereof. SEB Corporate Finance also expressed no view as to, and its opinion did not address, the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation to any officers, directors or employees of any
parties to the Offer, or any class of such persons, relative to the Offer consideration or otherwise.
SEB Corporate Finances opinion was based upon
current market, economic, financial and other conditions as in effect on, and upon the information made available as of, the date of such opinion. Any change in such conditions or information may require a revaluation of SEB Corporate Finances
opinion. Although subsequent developments may affect SEB Corporate Finances opinion, SEB Corporate Finance has no obligation to update, revise or reaffirm its opinion. SEB Corporate Finances opinion did not include any assessment as to
the actual value of Mylan Shares when issued or the prices at which Meda shares, Mylan Shares or any other securities would trade or otherwise be transferable at any time, including following announcement or consummation of the Offer.
SEB Corporate Finance was not requested to, and it did not, recommend the specific consideration payable in the Offer. The type and amount of consideration
payable in the Offer was determined through negotiations between Meda and Mylan and the decision to recommend the Offer was solely that of the Meda Board. SEB Corporate Finances opinion was only one of many factors considered by the Meda Board
in its evaluation of the Offer and should not be viewed as determinative of the views of the Meda Board or the management of Meda with respect to the Offer or the consideration payable in the Offer.
Meda has agreed to pay SEB Corporate Finance an aggregate fee of SEK 7 million, which was payable upon delivery of SEB Corporate Finances opinion.
In addition, Meda has agreed to reimburse SEB Corporate Finance for its expenses, including fees and expenses of counsel, and to indemnify SEB Corporate Finance and related parties against certain liabilities, including liabilities under federal
securities laws, arising out of SEB Corporate Finances engagement.
Meda selected SEB Corporate Finance based on SEB Corporate Finances
reputation, experience, industry knowledge, and familiarity with Meda and its business. Skandinaviska Enskilda Banken AB (SEB) is a leading bank in the Nordic market and offers Meda and other clients various financial services, including
providing and arranging loans. Furthermore, SEB has operations within securities trading and brokerage, equity research and corporate finance. In the ordinary course of business within securities trading and brokerage, SEB or any of its affiliates
may, at any point in time, hold long or short positions in, and may for its own or its clients accounts trade in, the shares and other securities issued by Meda or Mylan.
As a result of its position in the Nordic market, other parts of SEB, apart from SEB Corporate Finance, are at any point in time, engaged in business with
Meda, and SEB Corporate Finance has provided, and may at any point in time provide, financial advice to Meda regarding other transactions. As the Meda Board was aware, SEB, including SEB Corporate Finance, and its affiliates in the past have
provided, currently are providing and in the future may provide investment banking, commercial banking and other similar financial services to Meda and its affiliates unrelated to the Offer, for which services SEB and its affiliates have received
and expect to receive compensation, including, during the two-year period prior to the date of SEB Corporate Finances opinion, having acted or acting as (i) lead manager for a rights issue of Meda and (ii) a lender under a credit
facility of Meda. Although SEB and its affiliates had not provided investment banking, commercial banking and other similar financial services to Mylan during the two-year period prior to the date of SEB Corporate Finances opinion for which
SEB or its affiliates received or expect to receive compensation, SEB and its affiliates may provide such services to Mylan and its affiliates in the future, for which services SEB and its affiliates would expect to receive compensation.
54
THE OFFER
Offer Consideration
Each Meda
shareholder who validly tenders and does not properly withdraw prior to the Offer being declared unconditional will receive:
|
|
|
in respect of 80 percent of the number of Meda shares tendered by such shareholder, SEK 165 in cash per Meda share; and
|
|
|
|
in respect of the remaining 20 percent of the number of Meda shares tendered by such shareholder,
|
|
|
|
(i) if the Offeror Average Closing Price is greater than $50.74, a number of Mylan Shares per Meda share equal to SEK 165 divided by the Offeror Average Closing Price as converted from USD to SEK at the Announcement
Exchange Rate;
|
|
|
|
(ii) if the Offeror Average Closing Price is greater than $30.78 and less than or equal to $50.74, 0.386 Mylan Shares per Meda share; or
|
|
|
|
(iii) if the Offeror Average Closing Price is less than or equal to $30.78, a number of Mylan Shares per Meda share equal to SEK 100 divided by the Offeror Average Closing Price as converted from USD to SEK at the
Announcement Exchange Rate.
|
In short, each Meda shareholder will receive between SEK 152 and SEK 165 per Meda share in a combination
of cash and Mylan Shares (based on the Announcement Exchange Rate).
If the aggregate number of Mylan Shares that otherwise would be required to be issued
by Mylan as described above exceeds the Share Cap, then Mylan will have the option (in its sole discretion) to (a) issue Mylan Shares in connection with the Offer in excess of the Share Cap and thus pay the share portion of the Offer
consideration as described above (i.e. the 20 percent set out above), (b) increase the cash portion of the Offer consideration (so that it becomes larger than the 80 percent set out above) and thus correspondingly decrease the share portion of
the Offer consideration (so that it becomes smaller than the 20 percent set out above) such that the aggregate number of Mylan Shares issuable by Mylan in connection with the Offer would equal the Share Cap or (c) execute a combination of the
foregoing.
The table below sets forth illustrative examples of the Offer consideration that Meda shareholders will receive in exchange for 100 Meda
shares at different Offeror Average Closing Prices (subject to the treatment of fractional shares described below):
|
|
|
|
|
|
|
|
|
|
|
Offeror
Average
Closing
Price
(USD)
|
|
Cash
Consideration
(SEK)
(1)
|
|
Number of
Mylan
Shares
(2)
|
|
Equivalent Value of
Share Consideration
(SEK)
(3)
|
|
Total
Consideration
(SEK)
(4)
|
|
Average Total
Consideration Per
Meda Share (SEK)
(5)
|
60.00
|
|
13,200.00
|
|
6.54
|
|
3,300.00
|
|
16,500.00
|
|
165.00
|
55.00
|
|
13,200.00
|
|
7.13
|
|
3,300.00
|
|
16,500.00
|
|
165.00
|
50.00
|
|
13,200.00
|
|
7.72
|
|
3,248.50
|
|
16,448.50
|
|
164.48
|
45.00
|
|
13,200.00
|
|
7.72
|
|
2,923.65
|
|
16,123.65
|
|
161.24
|
40.00
|
|
13,200.00
|
|
7.72
|
|
2,598.80
|
|
15,798.80
|
|
157.99
|
35.00
|
|
13,200.00
|
|
7.72
|
|
2,273.95
|
|
15,473.95
|
|
154.74
|
30.00
(6)
|
|
13,200.00
|
|
7.92
|
|
2,000.00
|
|
15,200.00
|
|
152.00
|
25.00
(6)
|
|
13,200.00
|
|
9.51
|
|
2,000.00
|
|
15,200.00
|
|
152.00
|
(1)
|
Calculated as the product of (i) 80 Meda shares and (ii) SEK 165.
|
(2)
|
Calculated as the product of (i) 20 Meda shares and (ii) the applicable number of Mylan Shares per Meda share at the stated Offeror Average Closing Price.
|
55
(3)
|
Calculated as the product of (i) the number of Mylan Shares, (ii) the Offeror Average Closing Price and (iii) the Announcement Exchange Rate.
|
(4)
|
Calculated as the sum of (i) the Cash Consideration and (ii) the Equivalent Value of Share Consideration.
|
(5)
|
Calculated as the quotient of (i) the Total Consideration and (ii) 100 Meda shares.
|
(6)
|
Based on 365,467,371 outstanding Meda shares (the number of outstanding Meda shares as of the most recent trading day prior to the date of this prospectus), the Share Cap would be exceeded at this Offeror Average
Closing Price (assuming that 100 percent of the outstanding Meda shares will be tendered into the Offer). The figures shown assume that Mylan does not adjust the Offer consideration.
|
The table below sets forth illustrative examples of the Offer consideration that Meda shareholders will receive in exchange for 100 Meda shares at different
Offeror Average Closing Prices if Mylan elects to adjust the Offer consideration in the event the Share Cap is exceeded (subject to the treatment of fractional shares described below):
|
|
|
|
|
|
|
|
|
|
|
Offeror
Average
Closing
Price
(USD)
|
|
Cash
Consideration
(SEK)
(1)
|
|
Number of
Mylan Shares
|
|
Equivalent Value
of Share
Consideration
(SEK)
(2)
|
|
Total
Consideration
(SEK)
(3)
|
|
Average Total
Consideration Per
Meda Share
(SEK)
(4)
|
30.00
(5)
|
|
13,200.00
|
|
7.92
(6)
|
|
2,000.00
|
|
15,200.00
|
|
152.00
|
30.00
(5)
|
|
13,250.90
|
|
7.72
(7)
|
|
1,949.10
|
|
15,200.00
|
|
152.00
|
30.00
(5)
|
|
13,225.45
|
|
7.82
(8)
|
|
1,974.55
|
|
15,200.00
|
|
152.00
|
25.00
(5)
|
|
13,200.00
|
|
9.51
(6)
|
|
2,000.00
|
|
15,200.00
|
|
152.00
|
25.00
(5)
|
|
13,575.75
|
|
7.72
(7)
|
|
1,624.25
|
|
15,200.00
|
|
152.00
|
25.00
(5)
|
|
13,387.88
|
|
8.61
(8)
|
|
1,812.12
|
|
15,200.00
|
|
152.00
|
(1)
|
Calculated as the difference between (i) the Total Consideration and (ii) the Equivalent Value of Share Consideration.
|
(2)
|
Calculated as the product of (i) the number of Mylan Shares, (ii) the Offeror Average Closing Price and (iii) the Announcement Exchange Rate.
|
(3)
|
Equals the applicable Total Consideration in the table of illustrative examples set forth immediately above.
|
(4)
|
Calculated as the quotient of (i) the Total Consideration and (ii) 100 Meda shares.
|
(5)
|
Based on 365,467,371 outstanding Meda shares (the number of outstanding Meda shares as of the most recent trading day prior to the date of this prospectus), the Share Cap would be exceeded at this Offeror Average
Closing Price (assuming that 100 percent of the outstanding Meda shares will be tendered into the Offer).
|
(6)
|
Assumes that Mylan issues Mylan Shares in excess of the Share Cap and thus pays the share portion of the Offer consideration as described above with no adjustments.
|
(7)
|
Assumes that Mylan increases the cash portion of the Offer consideration and thus correspondingly decreases the share portion of the Offer consideration such that the aggregate number of Mylan Shares issuable by Mylan
in connection with the Offer would equal the Share Cap.
|
(8)
|
Assumes that Mylan increases the cash portion of the Offer consideration and thus correspondingly decreases the share portion of the Offer consideration such that 50 percent of the Mylan Shares that would otherwise be
issuable by Mylan in excess of the Share Cap are paid in cash.
|
For each directly registered Meda shareholder, the total number of Meda
shares tendered by such shareholder will be multiplied by 0.20 (subject to adjustment in the event Mylan adjusts the Offer consideration if the Share Cap is exceeded). The number of Meda shares resulting from the multiplication will be rounded up to
the nearest whole Meda share and tendered in exchange for Mylan Shares. The remaining number of Meda shares that such shareholder tendered will be rounded down to the nearest whole Meda share and tendered in exchange for cash. The Offer can be
accepted for each Meda shareholders entire holding of Meda shares, even if such Meda shares do not correspond to a whole number of Mylan Shares.
56
Only whole Mylan Shares will be delivered to Meda shareholders who accept the Offer. If a directly registered
Meda shareholder would otherwise be entitled to a fraction of a Mylan Share, such fraction will be aggregated with the fractions of Mylan Shares to which other directly registered Meda shareholders would otherwise be entitled and sold by
Handelsbanken on NASDAQ on behalf of such shareholders. The proceeds of such sales will be converted from USD to SEK, rounded to the nearest SEK 0.50, and distributed as promptly as practicable following settlement of the Offer to such shareholders
based on the fraction of a Mylan Share to which each such shareholder would otherwise be entitled. There will be no commission fee for such sales. By accepting the Offer, each accepting Meda shareholder authorizes Handelsbanken to sell any such
fraction on its behalf and convert the proceeds of such sale from USD to SEK. For each Meda shareholder whose Meda shares are registered with a nominee, any fraction of a Mylan Share to which such Meda shareholder would otherwise be entitled will be
treated in accordance with the policies and practices of such nominee.
If Meda pays dividends or makes any other distributions to its shareholders with a
record date occurring prior to the settlement of the Offer, or issues new shares (or takes any similar corporate action) resulting in a reduction of the value per share in Meda prior to the settlement of the Offer, the Offer consideration will be
reduced accordingly. The reduction shall first be made against the cash portion of the Offer consideration. Mylan reserves the right to determine whether this price adjustment mechanism or the condition to the completion of the Offer requiring Meda
to not take any action that is likely to impair the prerequisites for making or completing the Offer shall be invoked. Notwithstanding the foregoing in this paragraph, Meda will be permitted to pay in 2016 its regular annual cash dividend in respect
of Meda shares not exceeding SEK 2.50 per Meda share, with declaration, record and payment dates consistent with past practice, and such regular annual cash dividend shall not reduce the Offer consideration.
Meda shareholders that are the record owners of their shares and directly tender their shares to Mylan in the Offer will not have to pay any brokerage fees,
commissions or similar expenses. Meda shareholders who own their shares through a broker, dealer, bank, trust company or other nominee may be charged a fee by such broker, dealer, bank, trust company or other nominee if such broker, dealer, bank,
trust company or other nominee tenders Meda shares on their behalf. Meda shareholders should consult their broker, dealer, bank, trust company or other nominee to determine whether any charges will apply.
For more information, see Risk Factors Related to Mylan and the OfferRisks Related to the Offer
The value of the share portion of the
Offer consideration is dependent on the market price of Mylan Shares. Because the market price of Mylan Shares and the exchange rate between USD and SEK may fluctuate, the market value of the Mylan Shares that will be issued in connection with the
Offer may fluctuate on page 26 of this prospectus.
Conditions of the Offer
The Offer is subject to the following conditions:
(i) the Offer being accepted to such an extent that Mylan becomes the owner of shares in Meda representing more than 90 percent of the total
number of shares of Meda;
(ii) Mylans Registration Statement on Form S-4, of which this prospectus forms a part, becoming effective
under the Securities Act of 1933, as amended, and not being the subject of any stop order or proceeding seeking a stop order by the SEC;
(iii) the Mylan Shares to be issued in connection with the Offer being approved for listing on NASDAQ in the United States and the TASE in
Israel;
(iv) with respect to the Offer and the acquisition of Meda, receipt of all necessary regulatory, governmental or similar
clearances, approvals and decisions, including from competition authorities, in each case on terms which, in Mylans opinion, are acceptable;
(v) no circumstances having occurred which could have a material adverse effect or could reasonably be expected to have a material adverse
effect on Medas financial position or operation, including Medas sales, results, liquidity, equity ratio, equity or assets;
57
(vi) neither the Offer nor the acquisition of Meda being rendered wholly or partially impossible
or significantly impeded as a result of legislation or other regulation, any decision of a court or public authority, or any similar circumstance;
(vii) Meda not taking any action that is likely to impair the prerequisites for making or completing the Offer;
(viii) no information made public by Meda or disclosed by Meda to Mylan being materially inaccurate, incomplete or misleading, and Meda having
made public all information which should have been made public by it; and
(ix) no other party announcing an offer to acquire shares in
Meda on terms more favorable to the shareholders of Meda than the Offer.
Mylan reserves the right to withdraw the Offer in the event it becomes clear
that any of the above conditions is not satisfied or cannot be satisfied. With regard to conditions (ii)(ix), however, such withdrawal will only be made to the extent permitted by applicable law if the non-satisfaction is of material
importance to Mylans acquisition of the shares in Meda.
Mylan reserves the right to waive, in whole or in part, one or more of the conditions
above, including, with respect to condition (i) above, to complete the Offer at a lower level of acceptance.
Acceptance Period; Settlement
Once the Offer Document has been approved by the SFSA, the Offer Document and an accompanying acceptance form will be mailed to all directly registered Meda
shareholders and made available for download in electronic form on medatransaction.mylan.com, the Handelsbanken website (www.handelsbanken.se/investeringserbjudande) and the SFSA website (www.fi.se) (Offer Document only). Meda shareholders should
carefully read the information regarding the commencement date and expiration date of the acceptance period included in the Offer Document in the section The OfferAcceptance period, as well as the information regarding settlement
included in the Offer Document in the section Terms, conditions and instructionsSettlement.
Extension of
the Acceptance Period
Mylan has reserved the right to extend the acceptance period and, to the extent necessary and permissible, will do so in order
for the acceptance period to cover applicable decision-making procedures at relevant authorities. Mylan also has reserved the right to postpone the settlement date. Mylan will announce any extension of the acceptance period and/or postponement of
the settlement date by a press release in accordance with applicable laws and regulations.
Procedure for Tendering
The Offer Document and the accompanying acceptance form will contain instructions for tendering Meda shares. Meda shareholders should carefully read the
instructions for tendering Meda shares included in the acceptance form and in the section of the Offer Document entitled Terms, conditions and instructions.
Withdrawal Rights
Shareholders in Meda have the right to withdraw their acceptances of the Offer. To be valid, such withdrawal must have been received before Mylan has announced
that the conditions for the completion of the Offer have been satisfied or, if such announcement has not been made during the acceptance period, by the last day of the acceptance period. If any conditions for the completion of the Offer, which Mylan
has reserved the right to waive, continue to apply during an extension of the Offer, the right to withdraw an acceptance will apply in the same manner throughout any such extension of the Offer.
58
The Offer Document will contain instructions for withdrawing tendered Meda shares. Meda shareholders should
carefully read the instructions for withdrawing tendered Meda shares included in the section of the Offer Document entitled Terms, conditions and instructionsRight to withdraw acceptance.
Compulsory Acquisition
If
Mylan becomes the owner of more than 90 percent of the Meda shares, Mylan intends to initiate a compulsory acquisition procedure with respect to the remaining Meda shares in accordance with the Swedish Companies Act. The purchase price for Meda
shares acquired pursuant to the compulsory acquisition procedure will be determined by an arbitration tribunal. Such purchase price must be paid in cash and will include statutory interest accruing from the date the compulsory acquisition procedure
is initiated. After initiating the compulsory acquisition procedure, Mylan will have the opportunity to obtain advance title to the minority Meda shares prior to the arbitration tribunal determining the purchase price for such Meda shares, which
means that full ownership is obtained by Mylan with respect to the remaining Meda shares before the arbitration proceedings regarding the consideration have been completed. If advance title to the Meda shares is obtained by Mylan, the arbitration
tribunal may issue a separate award with respect to that portion of the purchase price that is not disputed by Mylan. In that case, Mylan would be obliged to pay such portion prior to the final arbitration award.
See Risk Factors Related to Mylan and the OfferRisks Related to the OfferHolders of Meda shares that do not accept the Offer and whose Meda
shares are acquired by Mylan in the compulsory acquisition proceedings may not receive payment for a significant period of time after completion of the Offer.
Ownership of Mylan after the Offer
Based on the assumptions described below, Mylan expects that Mylan shareholders will own, in the aggregate, approximately 95 percent of the outstanding Mylan
Shares on a fully diluted basis immediately after completion of the Offer and former Meda shareholders will own, in the aggregate, approximately 5 percent of the outstanding Mylan Shares on a fully diluted basis immediately after completion of the
Offer.
Mylan has assumed, solely for purposes of estimating the percentage of Mylan Shares that Mylan shareholders and former Meda shareholders will own
upon the completion of the Offer, that:
|
|
|
the number of Meda shares outstanding immediately prior to the completion of the Offer will be approximately 365.5 million;
|
|
|
|
the number of Mylan Shares outstanding on a fully diluted basis immediately prior to the completion of the Offer will be approximately 514.6 million;
|
|
|
|
Mylan will not adjust the Offer consideration in the event the Share Cap is exceeded;
|
|
|
|
the Offeror Average Closing Price will be between $30.78 and $50.74; and
|
|
|
|
100 percent of the outstanding Meda shares will be tendered into the Offer.
|
If Mylan becomes the owner of
more than 90 percent of the Meda shares, Mylan intends to initiate a compulsory acquisition procedure with respect to the remaining Meda shares in accordance with the Swedish Companies Act. Because shares acquired pursuant to compulsory acquisition
proceedings must be paid for in cash, holders of such Meda shares will not receive Mylan Shares as part of the consideration for their Meda shares, and former Meda shareholders will own in the aggregate a lower percentage of the outstanding Mylan
Shares than they otherwise would have owned had all Meda shareholders tendered their shares into the Offer.
Similarly, if Mylan adjusts the Offer
consideration in the event the Share Cap is exceeded (by increasing the cash portion of the Offer consideration and correspondingly decreasing the share portion of the Offer consideration), former Meda shareholders will receive fewer Mylan Shares
than they otherwise would have been delivered had
59
Mylan not adjusted the Offer consideration, and former Meda shareholders will own in the aggregate a lower percentage of the outstanding Mylan Shares than they otherwise would have owned had
Mylan not adjusted the Offer consideration.
See Risk Factors Related to Mylan and the OfferRisks Related to the OfferMeda shareholders
will have a reduced ownership and voting interest after the completion of the Offer and will exercise less influence over the management and policies of Mylan than they do over Meda.
Material Tax Considerations
The following sections contain a general discussion of the material tax consequences of the Offer and a compulsory acquisition to holders of Meda shares and
the post-Offer-and-compulsory-acquisition ownership and disposition of Mylan Shares.
THE TAX CONSIDERATIONS DISCUSSED IN THE FOLLOWING SECTIONS ARE
FOR GENERAL INFORMATION ONLY. EACH HOLDER OF MEDA SHARES OR MYLAN SHARES SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES OF THE OFFER AND A COMPULSORY ACQUISITION THAT MAY APPLY TO THE HOLDER.
U.S. Federal Income Tax Considerations
Scope of
Discussion
The discussion below is based upon the existing provisions of the Code, applicable U.S. Treasury Regulations, judicial authority,
administrative rulings effective as of the date hereof, and the income tax treaty between the United Kingdom and the United States (Tax Treaty). These laws and authorities are subject to change, possibly with retroactive effect. Any such
change could produce tax consequences to the holders of Meda shares and Mylan Shares that are different than those described herein. The discussion below does not address any state, local or non-U.S. tax consequences or any U.S. federal tax
consequences other than U.S. federal income tax consequences (such as estate and gift tax consequences or U.S. Medicare contribution tax consequences that may be applicable to a holder).
The discussion below is limited to U.S. Holders and non-U.S. Holders, in each case, who hold Meda shares or Mylan Shares as capital assets within the meaning
of Section 1221 of the Code (generally, property held for investment). This discussion is only a summary of the material U.S. federal income tax consequences of the Offer and a compulsory acquisition and the ownership and disposition of Mylan
Shares and does not purport to be a complete analysis or listing of all of the potential tax effects relevant to a decision on whether to approve the Offer. In particular, the tax treatment of holders will vary depending upon their particular
situations and, except as otherwise noted, this discussion does not deal with all U.S. federal income tax considerations that may be relevant to particular holders in light of their particular circumstances, such as holders who are dealers in
securities, who are subject to the alternative minimum tax provisions of the Code, that are banks, financial institutions, insurance companies, or tax-exempt entities, who own, directly, indirectly or constructively, 10 percent or more of the
outstanding Meda shares or Mylan Shares, who do not hold their Meda shares or Mylan Shares as a capital asset, who acquired their Meda shares or Mylan Shares in connection with stock option or stock purchase plans or in other compensatory
transactions, who hold Meda shares or Mylan Shares as part of an integrated investment (including a straddle) comprised of Meda shares or Mylan Shares, as the case may be, and one or more other positions, or who may hold Meda shares or
Mylan Shares subject to the constructive sale provisions of Section 1259 of the Code.
If a partnership (or an entity treated as a partnership for
U.S. federal income tax purposes) holds Meda shares or Mylan Shares, the tax treatment of a partner generally will depend on the status of the partner and on the activities of the partnership. Partners of partnerships holding Meda shares or Mylan
Shares should consult their own tax advisors.
60
For purposes of this discussion, a U.S. Holder is a beneficial owner of Meda shares or Mylan Shares
that is, for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a U.S. corporation or an entity taxable as a U.S. corporation, (iii) an estate whose income is subject to U.S.
federal income tax regardless of its source, or (iv) a trust if (x) a U.S. court can exercise primary supervision over the trusts administration and (y) one or more U.S. persons are authorized to control all substantial
decisions of the trust.
For purposes of this discussion, a non-U.S. Holder is a beneficial owner of Meda shares or Mylan Shares that is not a
U.S. Holder or a partnership (or an entity treated as a partnership U.S. federal income tax purposes).
As described under Risk FactorsWe
expect to be treated as a non-U.S. corporation for U.S. federal income tax purposes. Any changes to the tax laws or changes in other laws (including under applicable income tax treaties), regulations, rules, or interpretations thereof applicable to
inverted companies and their affiliates, whether enacted before or after the EPD Transaction, may materially adversely affect us in Part I, Item 1A of Mylans Annual Report on Form 10-K, Mylan expects to be treated as a non-U.S.
corporation for U.S. federal income tax purposes and this discussion assumes that Mylan will be so treated. The U.S. federal income tax consequences of receiving or owning Mylan Shares would be materially different than those stated herein if,
notwithstanding Mylans expectation, Mylan were to be treated as a U.S. corporation for U.S. federal income tax purposes.
Tax Consequences of
the Offer and a Compulsory Acquisition to Holders of Meda Shares
U.S. Holders
The receipt of Mylan Shares and cash in exchange for Meda shares pursuant to the Offer or cash in exchange for Meda shares pursuant to a compulsory acquisition
will be a taxable transaction to U.S. Holders for U.S. federal income tax purposes. Therefore, generally, a U.S. Holder of Meda shares will recognize capital gain or loss equal to the difference between (i) the amount realized, as described in
the succeeding sentence and (ii) the shareholders adjusted tax basis in the Meda shares exchanged therefor.
The amount realized generally will
be the sum of the fair market value of the Mylan Shares and the cash received in the Offer or the cash received in a compulsory acquisition. The fair market value of the Mylan Shares received will be determined on the settlement date of the Offer,
in the case of a cash basis U.S. Holder, and the date of sale, in the case of an accrual basis U.S. Holder. An accrual basis U.S. Holder, if it elects, may determine the U.S. dollar value of the amount realized by translating the amount received at
the spot rate of exchange on the settlement date of the Offer. If an accrual basis U.S. holder does not make such an election, such accrual basis U.S. Holder may have foreign currency exchange gain or loss because of differences between USD/SEK
exchange rates prevailing on the date of sale and on the settlement date. Any such foreign currency exchange gain or loss would be treated as ordinary income or loss and would be in addition to gain or loss realized by the U.S. Holder on the
disposition of Mylan Shares. Except with respect to foreign currency exchange gain or loss, any such gain or loss generally would be capital gains.
Capital gains of a non-corporate U.S. Holder (including an individual) will be eligible for the preferential U.S. federal income tax rates applicable to
long-term capital gains if the U.S. Holder has held its Meda shares for more than one year as of the date of the Offer or a compulsory acquisition, as applicable. The deductibility of capital losses is subject to limitations.
A U.S. Holders adjusted tax basis in the Meda shares generally should equal the holders purchase price for the shares, as adjusted to take into
account stock dividends, stock splits or similar transactions.
If a U.S. Holder acquired different blocks of Meda shares at different times or at
different prices, the U.S. Holder must determine its tax basis and holding period separately with respect to each block of Meda shares.
61
A U.S. Holder receiving Mylan Shares in the Offer will have an aggregate tax basis in those Mylan Shares received
equal to the fair market value of the Mylan Shares as of the effective date of the Offer and the holding period of the Mylan Shares will begin on the day after the Offer becomes effective. Although it is not entirely clear how statutory interest
accruing from the date the compulsory acquisition procedure is initiated will be treated for U.S. federal income tax purposes, this discussion assumes it is properly treated as interest. A U.S. Holder will be taxed on amounts treated as interest
accruing from the date the compulsory acquisition procedure is initiated as ordinary income.
Except in the case of certain corporations or other exempt
holders, Mylan Shares and/or cash received by a U.S. Holder in the Offer or a compulsory acquisition may be subject to U.S. information reporting requirements and may be subject to backup withholding unless the U.S. Holder provides an accurate
taxpayer identification number on a properly completed U.S. Internal Revenue Service (IRS) Form W-9 (or appropriate successor form) and certifies that no loss of exemption from backup withholding has occurred. The amount of any backup
withholding will be allowed as a refund or credit against a holders U.S. federal income tax liability, provided that certain required information is timely furnished to the IRS.
Non-U.S. Holders
A non-U.S. Holder generally will not be
subject to U.S. federal income tax on any gain realized upon an exchange pursuant to the Offer or a compulsory acquisition unless:
|
|
|
the gain is effectively connected with the non-U.S. Holders conduct of a trade or business in the United States and, if required by an applicable income tax treaty as a condition for subjecting the
holder to U.S. federal income taxation on a net income basis, the gain is attributable to a U.S. permanent establishment of the non-U.S. Holder; or
|
|
|
|
the non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and certain other conditions are satisfied.
|
Gain recognized by a non-U.S. Holder described in the first bullet point above will be subject to tax under the rules described above as if it were a U.S.
Holder and, in the case of a non-U.S. corporation, might be subject to an additional branch profits tax at a 30 percent rate (or such lower rate as may be specified by an applicable income tax treaty). An individual non-U.S. Holder of
Meda shares who is present in the United States for 183 days or more during the taxable year of the Offer or a compulsory acquisition, as applicable, and satisfies certain other conditions will be subject to U.S. federal income tax at a 30 percent
rate (or such lower rate as may be specified by an applicable income tax treaty) on the gain, which may be offset by U.S. source capital losses of the non-U.S. Holder so long as the non-U.S. Holder has timely filed U.S. federal income tax returns
with respect to such losses.
A non-U.S. Holder generally will not be subject to U.S. federal income tax on any amounts received pursuant to the
compulsory acquisition, which is characterized as accrued interest, unless the income is effectively connected with the non-U.S. Holders conduct of a trade or business in the United States or in certain other circumstances.
A non-U.S. Holder will not be subject to U.S. backup withholding if it provides a certification of non-U.S. status on a properly completed W-8BEN or W-8BEN-E
(or other applicable form). Any amounts withheld under the backup withholding rules will be allowed as a refund or credit against any non-U.S. Holders U.S. federal tax liability, so long as the required information is timely furnished to the
IRS.
If a non-U.S. Holder is a citizen or resident of, or otherwise subject to taxation in, a country other than the United States, the non-U.S. tax
consequences of the receipt of Mylan Shares and cash pursuant to the Offer or cash pursuant to a compulsory acquisition will depend on the applicable tax laws in such country. Mylan recommends that non-U.S. Holders consult their own tax advisors
regarding the tax consequences of the receipt of Mylan Shares and cash pursuant to the Offer or cash pursuant to a compulsory acquisition.
62
Tax Consequences of Holding Mylan Shares
U.S. Holders
Dividends.
The gross amount of cash
distributions on Mylan Shares (including amounts withheld in respect of taxes, if any) will be taxable as dividends to the extent paid out of Mylans current or accumulated earnings and profits, as determined under U.S. federal income tax
principles. Such income will be includable in a U.S. Holders gross income as ordinary income on the day actually or constructively received. Such dividends will not be eligible for the dividends-received deduction allowed to corporations under
the Code.
Subject to exceptions for short-term and hedged positions, non-corporate U.S. Holders (including individuals) may be eligible for reduced rates
of taxation applicable to qualified dividend income on certain dividends if (i) Mylan is eligible for the benefits of a comprehensive income tax treaty with the United States that the U.S. Treasury Department determines to be
satisfactory for purposes of the qualified dividend rules and that includes an exchange of information program and (ii) Mylan was not, in its taxable year prior to the distribution, and is not, in its taxable year of the distribution, a passive
foreign investment company (PFIC) under Section 1297 of the Code. The U.S. Treasury Department has determined that the Tax Treaty meets these requirements, and Mylan believes that it is eligible for benefits under the Tax Treaty. As
explained below, Mylan believes it will not be a PFIC in the current taxable year, and does not anticipate becoming a PFIC in any subsequent taxable year.
Except if certain exceptions apply, dividends paid by Mylan should constitute foreign source income and will, depending on the U.S. Holders
circumstances, be either passive or general category income for purposes of computing the foreign tax credit allowable to the holder. Foreign tax credits will not be allowed for foreign dividend withholding taxes, if any,
imposed on a U.S. Holder in respect of certain short-term or hedged positions in Mylan Shares. The foreign tax credit rules are complex and Mylan recommends that U.S. Holders consult their own tax advisors concerning the implications of these rules
in light of their particular circumstances.
To the extent that the amount of any distribution exceeds Mylans current and accumulated earnings and
profits for a taxable year, as determined under U.S. federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction (but not below zero) in the adjusted tax basis of the U.S. Holders
Mylan Shares, and to the extent the amount of the distributions exceeds such adjusted tax basis, the excess will be taxed as capital gain recognized on a sale or exchange.
Capital gains.
For U.S. federal income tax purposes, a U.S. Holder will recognize gain or loss on any sale or exchange of a Mylan Share in an amount
equal to the difference between the amount realized for the share and its adjusted tax basis in the share. The gain or loss recognized by a U.S. Holder on the sale or exchange will generally be capital gain or loss. Capital gains of a non-corporate
U.S. Holder (including an individual) will be eligible for the preferential U.S. federal income tax rates applicable to long-term capital gains if the U.S. Holder has held its Mylan Shares for more than one year as of the date of the sale or
exchange. The deductibility of capital losses is subject to limitations.
Passive Foreign Investment Company.
U.S. Holders would be subject to a
special, adverse U.S. federal income tax regime (that would differ in certain respects from that described above) if Mylan were, or were to become, a PFIC for U.S. federal income tax purposes. Although Mylan believes it will not be a PFIC for the
current year and that it is unlikely that it will become a PFIC, the determination of whether a non-U.S. corporation is a PFIC is made annually, and thus may be subject to change. In addition, the IRS or a court may disagree with Mylans
position, and Mylan cannot assure U.S. Holders that Mylan will avoid PFIC status in the future. Mylan recommends that U.S. Holders consult with their own tax advisors regarding the adverse U.S. federal income tax consequences of owning the stock of
a PFIC and of making certain available elections designed to lessen those adverse consequences.
Controlled Foreign Corporation.
If one or more
U.S. persons who each own, directly, indirectly or constructively, 10 percent or more of the vote of Mylan (each, a CFC Shareholder) own directly, indirectly or
63
constructively more than 50 percent of Mylan (by vote or value), Mylan would generally be treated as a controlled foreign corporation (a CFC). CFC Shareholders are treated as
receiving current distributions of their respective share of certain income of the CFC without regard to any actual distributions. CFC Shareholders are subject to certain burdensome U.S. federal income tax and administrative requirements (but
generally are not subject to the requirements generally applicable to U.S. shareholders of a PFIC). In addition, a U.S. Holder who is or has been a CFC Shareholder may recognize dividend income and not capital gain on the disposition of shares of
the CFC. U.S. Holders who are not CFC Shareholders would not be subject to any additional U.S. federal income tax consequences in the event Mylan becomes a CFC in the future. Mylan believes that it is not a CFC and does not expect to become a CFC in
the future.
Information reporting and backup withholding
. Except in the case of certain corporations or other exempt holders, dividends paid by
Mylan to a U.S. Holder may be subject to U.S. information reporting requirements and may be subject to backup withholding unless the U.S. Holder provides an accurate taxpayer identification number on a properly completed IRS Form W-9 and certifies
that no loss of exemption from backup withholding has occurred. The amount of any backup withholding will be allowed as a credit against the U.S. Holders U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided
that certain required information is timely furnished to the IRS.
Specified foreign financial assets
. Individual U.S. Holders that own
specified foreign financial assets with an aggregate value in excess of $50,000 are generally required to file an information statement along with their tax returns, currently on IRS Form 8938, with respect to such assets.
Specified foreign financial assets include any financial accounts held at a foreign financial institution, as well as securities issued by a foreign issuer (which would include Mylan Shares) that are not held in accounts maintained by
financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations have been proposed that would extend this reporting requirement to certain entities that are treated as
formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. Holders who fail to report the required information could be subject to substantial penalties. Mylan recommends
that U.S. Holders consult their own tax advisors concerning the application of these rules to their investment in Mylan, including the application of the rules to their particular circumstances.
Non-U.S. Holders
Dividends
. Non-U.S. Holders
generally will not be subject to U.S. federal income tax (including U.S. federal withholding tax) on dividends in respect of Mylan Shares.
Holders whose
dividend is effectively connected with the conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed place of business maintained by the non-U.S.
Holder in the United States) will be subject to U.S. federal income tax on a net income basis in the same manner as if the non-U.S. Holder were a U.S. Holder and, in the case of a non-U.S. corporation, might be subject to an additional branch
profits tax equal to 30 percent of its effectively connected earnings and profits (or such lower rate as may be specified by an applicable income tax treaty) in the same manner as a U.S. Holder, as described above.
Capital gain
. In addition, a non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax on any gain recognized on the
sale, exchange or other disposition of Mylan Shares unless:
|
|
|
the gain is effectively connected with the non-U.S. Holders conduct of a trade or business in the United States, and, if required by an applicable income tax treaty as a condition for subjecting the
holder to U.S. federal income taxation on a net income basis, the gain is attributable to a U.S. permanent establishment of the non-U.S. Holder; or
|
|
|
|
the non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of the transaction and certain other conditions are satisfied.
|
64
Gain recognized by a non-U.S. Holder described in the first bullet point above will be subject to tax under the
rules described above as if it were a U.S. Holder and, in the case of a non-U.S. corporation, might be subject to an additional branch profits tax at a 30 percent rate (or such lower rate as may be specified by an applicable income tax
treaty). An individual non-U.S. Holder of Mylan Shares who is present in the United States for 183 days or more during the taxable year of the transaction and satisfies certain other conditions will be subject to U.S. federal income tax at a 30
percent rate (or such lower rate as may be specified by an applicable income tax treaty) on the gain, which may be offset by U.S. source capital losses of the non-U.S. Holder so long as the non-U.S. Holder has timely filed U.S. federal income tax
returns with respect to such losses.
If a non-U.S. Holder is a citizen or resident of, or otherwise subject to taxation in, a country other than the
United States, the foreign tax consequences of owning and disposing of Mylan Shares will depend on the applicable tax laws in such country Mylan recommends that non-U.S. Holders consult their own tax advisors regarding the tax consequences of the
owning and disposing of Mylan Shares.
Non-U.S. Holders may be required to comply with certification and identification procedures in order to establish
an exemption from information reporting and backup withholding.
FATCA
Provisions under Sections 1471 through 1474 of the Code and applicable U.S. Treasury Regulations commonly referred to as FATCA generally impose 30
percent withholding on certain withholdable payments and, in the future, may impose such withholding on foreign passthru payments made by a foreign financial institution (each as defined in the Code) that has
entered into an agreement with the IRS to perform certain diligence and reporting obligations with respect to the foreign financial institutions accounts (a participating foreign financial institution or PFFI). While
Mylan does not expect to be treated as a foreign financial institution for the purposes of FATCA, it is possible that FATCA withholding may be imposed on Mylan dividends if, for example, such dividends are paid to an intermediary foreign
financial institution that is not a PFFI or if the dividend is paid to a recipient who has failed to comply with certain FATCA reporting obligations (a so called recalcitrant account holder). Mylan recommends that prospective investors
consult their own tax advisors regarding the potential impact of FATCA and any foreign legislation or foreign intergovernmental agreement implementing FATCA on their ownership of Mylan Shares.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES DISCUSSED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACH HOLDER OF MEDA SHARES OR MYLAN SHARES SHOULD CONSULT HIS OR
HER OWN TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES OF THE OFFER AND A COMPULSORY ACQUISITION THAT MAY APPLY TO THE HOLDER.
Sweden Tax
Considerations
Below is a summary of certain Swedish tax issues related to the Offer for private individuals and limited liability companies that are
residents of Sweden for tax purposes (unless otherwise stated) and hold Meda shares (Swedish Holders). This summary is based on current legislation in Sweden and is intended to provide general information only regarding the shares for
the period during which the Meda shares are traded on Nasdaq Stockholm and Mylan Shares are traded on NASDAQ and the TASE.
This summary
does not cover:
|
|
|
the tax consequences related to a compulsory acquisition;
|
|
|
|
situations where shares are held as current assets in business operations (for tax purposes);
|
|
|
|
situations where shares are held by a limited partnership or a partnership;
|
65
|
|
|
situations where shares are held in an investment savings account (Sw.
investeringssparkonto
);
|
|
|
|
the special rules regarding tax-free capital gains (including non-deductible capital losses) and dividends that may be applicable e.g. when the investor holds shares representing more than 10 percent of the voting
rights or the capital or holds shares that are deemed to be held for business purposes (for tax purposes);
|
|
|
|
the special rules that may be applicable to private individuals who make or reverse a so called investor deduction (Sw.
investeraravdrag
);
|
|
|
|
taxation of any currency exchange gains or losses;
|
|
|
|
credit of foreign taxes;
|
|
|
|
foreign companies conducting business through a permanent establishment in Sweden; or
|
|
|
|
foreign companies that have been Swedish companies.
|
Further, special tax rules apply to certain categories of
companies. The tax consequences for each shareholder depend on the holders particular circumstances.
Disposal of some Meda shares against
cash
For shareholders in Meda that accept the Offer and thereby dispose some of their Meda shares against cash, a liability for capital gains
taxation will occur. The capital gain or the capital loss is computed as the difference between the consideration, less selling expenses, and the acquisition value and should be declared in the income tax return. The acquisition value for all shares
of the same class and type shall be added together and computed collectively in accordance with the so-called average method (
Sw. genomsnittsmetoden
). As an alternative, the so-called standard method (
Sw. schablonmetoden
) may be used
at the disposal of listed shares, such as the Meda shares. This method means that the acquisition value may be determined as 20 percent of the consideration less selling expenses.
Private individuals
For private individuals resident in
Sweden for tax purposes, capital income such as interest income, dividends and capital gains is taxed in the capital income category. The tax rate in the capital income category is 30 percent. Capital losses on listed shares, such as the Meda
shares, are fully deductible against taxable capital gains realized in the same year on shares, as well as on listed securities taxed as shares (however not mutual funds, (
Sw. värdepappersfonder
), or hedge funds, (
Sw.
specialfonder
), containing Swedish receivables only, (
Sw. räntefonder
)). 70 percent of capital losses not absorbed by these set-off rules are deductible in the capital income category.
If there is a net loss in the capital income category, a reduction is granted of the tax on income from employment and business operations, as well as
national and municipal property tax. This tax reduction is 30 percent of the net loss that does not exceed SEK 100,000 and 21 percent of any remaining net loss. A net loss cannot be carried forward to future tax years.
Limited liability companies
For limited liability
companies (
Sw. aktiebolag
) all income, including taxable capital gains and taxable dividends, is taxed as income from business operations at a rate of 22 percent. Deductible capital losses on shares may only offset taxable capital gains on
shares and other securities taxed as shares. A net capital loss on shares that cannot be utilized during the year of the loss, may be carried forward (by the limited liability company that
66
has suffered the loss) and offset taxable capital gains on shares and other securities taxed as shares in future years, without any limitation in time. If a capital loss cannot be deducted by the
company that has suffered the loss, it may be deducted from another group companys taxable capital gains on shares and other securities taxed as shares, provided that the companies are entitled to tax consolidation (through so-called group
contributions) and both companies request this treatment for a tax year having the same filing date for each company (or, if one of the companies accounting liability ceases, would have had the same filing date). Special tax rules may apply to
certain categories of companies or certain legal persons (e.g. investment companies).
Disposal of some Meda shares against Mylan Shares
Swedish Holders who accept the Offer and acquire new Mylan Shares against some of their Meda shares should be considered to have disposed of such
Meda shares. Based on the assumption that the sale of the Meda shares to Mylan will be made on market terms and that Mylan, by the end of the calendar year during which the disposal of the Meda shares was completed, will hold Meda shares
representing more than in aggregate 50 percent of the total votes in Meda, the rules on roll-over relief should apply to private individuals and deferred taxation should apply to limited liability companies. If the Offer is completed, Mylan intends
to hold Meda shares in such manner that these requirements will be met.
Private individuals holding
Private individuals that are residents of Sweden for tax purposes should be deemed to have acquired the Mylan Shares at a purchase price corresponding to the
acquisition value of the Meda shares if the rules on roll-over relief apply. It should be noted that the exchange of shares itself does not need to be declared in the tax return.
If a private individual ceases to have his or her residence (Sw.
bosättning
) or ceases to permanently stay (Sw.
stadigvarande vistas
)
within the European Economic Area and the rules on roll-over relief have been applied, a fictitious capital gain assignable to the share exchange would become taxable. A capital gain or a capital loss will be computed as the difference
between the fair market value of the Mylan Shares received at the time of the disposal and the acquisition value of the Meda shares disposed of. Mylan intends to make a request to the Swedish Tax Agency for a determination of the fair market value
of the Mylan Shares at the time of disposal. Information regarding the value will be provided on Mylans and Medas respective websites, www.mylan.com and www.meda.se.
Limited liability companies
Limited liability companies
that wish to defer the tax on the capital gain must declare the capital gain in their tax returns and formally request a tax deferral. A capital gain or a capital loss will be computed as the difference between the fair market value of the Mylan
Shares received at the time of the disposal and the acquisition value of the Meda shares disposed of. Mylan intends to make a request to the Swedish Tax Agency for a determination of the fair market value of the Mylan Shares at the time of disposal.
Information regarding the value will be provided on Mylans and Medas respective websites, www.mylan.com and www.meda.se.
If a limited
liability company has requested a tax deferral of a capital gain on disposed Meda shares, the deferred capital gain should be brought to taxation no later than when the received Mylan Shares are disposed of. If this company already owned Mylan
Shares of the same type and class before accepting the Offer or acquires such Mylan Shares following the acceptance of the Offer, a certain order of priority is applicable. When the Mylan Shares are sold, the Mylan Shares are then deemed to have
been disposed of in the following order.
|
1.
|
Mylan Shares acquired prior to the Offer
|
|
2.
|
Mylan Shares acquired in connection with the Offer
|
|
3.
|
Mylan Shares acquired after the Offer
|
67
Taxation of holders of Mylan Shares following the completion of the Offer
Private individuals
For private individuals resident in
Sweden for tax purposes, capital income such as interest income, dividends and capital gains is taxed in the capital income category. The tax rate in the capital income category is 30 percent. Capital gains and capital losses are calculated and
offset in the same way as described above under Disposal of some Meda shares against cash. This also applies to such capital gains or losses on received fractions of Mylan Shares that will be added together with other such fractions and
disposed of for the shareholders account.
For private individuals resident in Sweden for tax purposes, a preliminary tax is normally withheld on
dividends if the dividends are paid by Euroclear or by another legal entity domiciled in Sweden, including a Swedish branch of a non-Swedish corporation. For private individuals resident in Sweden for tax purposes, such preliminary tax is calculated
so that it, together with any foreign tax that has been withheld, amounts to 30 percent.
Limited liability companies
For limited liability companies (
Sw. aktiebolag
) all income, including taxable capital gains, is taxed as income from business operations at a rate of
22 percent. Capital gains and capital losses are calculated and offset in the same way as described above under Disposal of some Meda shares against cash.
Shareholders not resident in Sweden for tax purposes
Shareholders not resident in Sweden for tax purposes are normally not liable for capital gains taxation in Sweden upon disposals of shares. Shareholders may,
however, be subject to taxation in their country of residence.
According to a special rule, private individuals not resident in Sweden for tax purposes
are, however, subject to Swedish capital gains taxation upon disposals of shares, if they have been residents of Sweden due to a residence (Sw.
bosättning
) or permanent stay (Sw.
stadigvarande vistelse
) in Sweden at any time
during the calendar year of disposal or the ten calendar years preceding the year of disposal. In a number of cases though, the applicability of this rule is limited by tax treaties.
THE SWEDEN TAX CONSIDERATIONS DISCUSSED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACH HOLDER OF MEDA SHARES OR MYLAN SHARES SHOULD CONSULT HIS OR HER OWN
TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES OF THE OFFER AND A COMPULSORY ACQUISITION THAT MAY APPLY TO THE HOLDER.
Netherlands Tax
Considerations
Scope of Discussion
The following
is a general summary of certain material Netherlands tax consequences of the Offer and a compulsory acquisition and the ownership and disposition of Mylan Shares. This summary does not purport to describe all possible tax considerations or
consequences that may be relevant to all categories of investors, some of which may be subject to special treatment under applicable law (such as trusts or other similar arrangements), and in view of its general nature, it should be treated with
corresponding caution.
All Meda shareholders and holders of Mylan Shares should consult with their own tax advisors with regard to the tax consequences
of the Offer and a compulsory acquisition and the holding or disposal of Mylan Shares. The discussion below is included for general information purposes only.
68
Please note that this summary does not describe the tax considerations for:
|
(i)
|
holders of Meda shares and holders of Mylan Shares if such holders, and in the case of individuals, his/her partner or certain of their relatives by blood or marriage in the direct line (including foster children), have
a substantial interest or deemed substantial interest in Meda or in Mylan under the Netherlands Income Tax Act 2001 (in Dutch:
Wet inkomstenbelasting 2001
). Generally speaking, a holder of securities in a company is considered to
hold a substantial interest in such company, if such holder alone or, in the case of individuals, together with his/her partner (statutorily defined term), directly or indirectly, holds (i) an interest of 5 percent or more of the total issued
and outstanding capital of that company or of 5 percent or more of the issued and outstanding capital of a certain class of shares of that company; or (ii) rights to acquire, directly or indirectly, such interest; or (iii) certain profit
sharing rights in that company that relate to 5 percent or more of the companys annual profits and/or to 5 percent or more of the companys liquidation proceeds. A deemed substantial interest may arise if a substantial interest (or part
thereof) in a company has been disposed of, or is deemed to have been disposed of, on a non-recognition basis;
|
|
(ii)
|
holders of Meda shares and holders of Mylan Shares that qualify or qualified as a participation for purposes of the Netherlands Corporate Income Tax Act 1969 (in Dutch:
Wet op de vennootschapsbelasting
1969
). Generally, a taxpayers shareholding of 5 percent or more in a companys nominal paid-up share capital qualifies as a participation. A holder may also have a participation if such holder does not have a 5 percent
shareholding but a related entity (statutorily defined term) has a participation or if the company in which the shares are held is a related entity (statutorily defined term);
|
|
(iii)
|
holders of Meda shares who are individuals for whom the Meda shares or any benefit derived from the Meda shares are a remuneration or deemed to be a remuneration for activities performed by such holders or certain
individuals related to such holders (as defined in the Netherlands Income Tax Act 2001);
|
|
(iv)
|
holders of Mylan Shares who are individuals for whom the Mylan Shares or any benefit derived from the Mylan Shares are a remuneration or deemed to be a remuneration for activities performed by such holders or certain
individuals related to such holders (as defined in the Netherlands Income Tax Act 2001); and
|
|
(v)
|
pension funds, fiscal investment institutions (in Dutch:
fiscale beleggingsinstellingen
), exempt investment institutions (in Dutch:
vrijgestelde beleggingsinstellingen
) and other
entities that are, in whole or in part, not subject to or exempt from corporate income tax in the Netherlands, as well as entities that are exempt from corporate income tax in their country of residence, such country of residence being another state
of the European Union, Norway, Liechtenstein, Iceland or any other state with which the Netherlands have agreed to exchange information in line with international standards.
|
The United Kingdom and the Netherlands competent authorities have determined that Mylan is tax resident solely in the United Kingdom for the purposes of the
Netherlands-U.K. tax treaty and Mylan has received a binding ruling confirming this treatment. Mylan will therefore be tax resident solely in the United Kingdom so long as the facts and circumstances set forth in the relevant application letters
sent to those authorities remain accurate. Even though Mylan received a binding ruling, the applicable tax laws or interpretations thereof may change, or the assumptions on which such rulings were based may differ from the facts, and in such case
such changes may invalidate the contents of this section, which will not be updated to reflect any such change.
Except as otherwise indicated, this
summary only addresses Netherlands national tax legislation and published regulations, whereby the Netherlands means the part of the Kingdom of the Netherlands located in Europe, as in effect on the date hereof and as interpreted in published case
law until this date, without prejudice to any amendment introduced or to become effective at a later date and implemented with or without retroactive effect.
69
Tax Consequences of the Offer and a Compulsory Acquisition to Holders of Meda sharesTaxes on Income
and Capital Gains
Netherlands Resident Individuals
If a holder of Meda shares is a resident or deemed to be resident in the Netherlands for Netherlands tax purposes (Netherlands Resident
Individual), any benefit derived or deemed to be derived from the exchange of such holders Meda shares for Mylan Shares and cash pursuant to the Offer or a compulsory acquisition is taxable at the progressive income tax rates (with a
maximum of 52 percent), if:
|
(a)
|
the Meda shares are attributable to an enterprise from which the Netherlands Resident Individual derives a share of the profit, whether as an entrepreneur or as a person who has a co-entitlement to the net worth (in
Dutch:
medegerechtigd tot het vermogen
) of such enterprise, without being an entrepreneur or a shareholder, as defined in the Netherlands Income Tax Act 2001; or
|
|
(b)
|
the holder of the Meda shares is considered to perform activities with respect to the Meda shares that go beyond ordinary asset management (in Dutch:
normaal, actief vermogensbeheer
) or derives
benefits from the Meda shares that are taxable as benefits from other activities (in Dutch
resultaat uit overige werkzaamheden
).
|
If the above-mentioned conditions (a) and (b) do not apply to the individual holder of Meda shares, the Meda shares are recognised as investment
assets and included as such in such holders net investment asset base
(
in Dutch:
rendementsgrondslag
). Such holder will be taxed annually on a deemed income of 4 percent of his or her net investment assets for the
year at an income tax rate of 30 percent. The net investment assets for the year are the fair market value of the investment assets less the allowable liabilities on January 1 of the relevant calendar year. A tax free allowance may be
available. Actual benefits derived from the Meda shares are as such not subject to Netherlands income tax.
Netherlands Resident Entities
Any benefit derived or deemed to be derived from the Meda shares held by corporate legal entities who are resident or deemed to be resident in the Netherlands
for Netherlands tax purposes (Netherlands Resident Entities), including any capital gains realized on the exchange of Meda shares for Mylan Shares and cash pursuant to the Offer or compulsory acquisition, will generally be subject to
Netherlands corporate income tax at a rate of 25 percent (a corporate income tax rate of 20 percent applies with respect to taxable profits up to 200,000).
Non-residents of the Netherlands
A holder of Meda shares
will not be subject to Netherlands taxes on income or on capital gains in respect of any payment under the Meda shares or any gain realized on the exchange of Meda shares for Mylan Shares and cash pursuant to the Offer or a compulsory acquisition,
provided that:
|
(i)
|
such holder is neither a resident nor deemed to be resident in the Netherlands for Netherlands tax purposes;
|
|
(ii)
|
such holder does not have an interest in an enterprise or a deemed enterprise (statutorily defined term) which, in whole or in part, is either effectively managed in the Netherlands or is carried out through a permanent
establishment, a deemed permanent establishment or a permanent representative in the Netherlands and to which enterprise or part of an enterprise the Meda shares are attributable; and
|
|
(iii)
|
in the event such holder is an individual, such holder does not carry out any activities in the Netherlands with respect to the Meda shares that go beyond ordinary asset management and does not derive benefits from the
Meda shares that are taxable as benefits from other activities in the Netherlands.
|
70
Tax Consequences of Holding Mylan SharesWithholding Tax
Residents of the Netherlands
Dividends distributed by
Mylan to Netherlands Resident Individuals and Netherlands Resident Entities generally are subject to Netherlands dividend withholding tax at a rate of 15 percent. The expression dividends distributed includes, among other things:
|
|
|
distributions in cash or in kind, deemed and constructive distributions and repayments of paid-in capital not recognized for Netherlands dividend withholding tax purposes;
|
|
|
|
liquidation proceeds, proceeds of redemption of Mylan Shares, or proceeds of the repurchase of Mylan Shares by Mylan or one of its subsidiaries or other affiliated entities to the extent such proceeds exceed the average
paid-in capital of those Mylan Shares as recognized for purposes of Netherlands dividend withholding tax;
|
|
|
|
an amount equal to the par value of Mylan Shares issued or an increase of the par value of Mylan Shares, to the extent that it does not appear that a contribution, recognized for purposes of Netherlands dividend
withholding tax, has been made or will be made; and
|
|
|
|
partial repayment of the paid-in capital, recognized for purposes of Netherlands dividend withholding tax, if and to the extent that Mylan has net profits (in Dutch:
zuivere winst
), unless the holders
of Mylan Shares have resolved in advance at a general meeting to make such repayment and the par value of the Mylan Shares concerned has been reduced by an equal amount by way of an amendment of our articles of association.
|
Netherlands Resident Individuals and Netherlands Resident Entities can generally credit the Netherlands dividend withholding tax against their income tax or
corporate income tax liability.
In general, Mylan will be required to remit all amounts withheld as Netherlands dividend withholding tax to the
Netherlands tax authorities. However, under certain circumstances, Mylan is allowed to reduce the amount to be remitted to the Netherlands tax authorities by the lesser of:
|
|
|
3 percent of the portion of the distribution paid by Mylan that is subject to Netherlands dividend withholding tax; and
|
|
|
|
3 percent of the dividends and profit distributions, before deduction of foreign withholding taxes, received by Mylan from qualifying foreign subsidiaries in the current calendar year (up to the date of the distribution
by Mylan) and the two preceding calendar years, as far as such dividends and profit distributions have not yet been taken into account for purposes of establishing the above mentioned reduction.
|
Although this reduction reduces the amount of Netherlands dividend withholding tax that Mylan is required to remit to the Netherlands tax authorities, it does
not reduce the amount of tax that Mylan is required to withhold on dividends distributed.
Pursuant to legislation to counteract dividend
stripping, a reduction, exemption, credit or refund of Netherlands dividend withholding tax is denied if the recipient of the dividend is not the beneficial owner as described in the Netherlands Dividend Withholding Tax Act 1965. This
legislation generally targets situations in which a shareholder retains its economic interest in shares but reduces the withholding tax costs on dividends by a transaction with another party. It is not required for these rules to apply that the
recipient of the dividends is aware that a dividend stripping transaction took place.
Non-residents of the Netherlands
Payments by Mylan on Mylan Shares to holders of Mylan Shares who are neither Netherlands Resident Individuals nor Netherlands Resident Entities may be made
free from Netherlands dividend withholding tax.
71
Tax Consequences of Holding Mylan SharesTaxes on Income and Capital Gains
Netherlands Resident Individuals
If a holder of Mylan
Shares is a Netherlands Resident Individual, any benefit derived or deemed to be derived from the Mylan Shares is taxable at the progressive income tax rates (with a maximum of 52 percent), if:
|
(a)
|
the Mylan Shares are attributable to an enterprise from which the Netherlands Resident Individual derives a share of the profit, whether as an entrepreneur or as a person who has a co-entitlement to the net worth (in
Dutch:
medegerechtigd tot het vermogen
) of such enterprise, without being an entrepreneur or a shareholder, as defined in the Netherlands Income Tax Act 2001; or
|
|
(b)
|
the holder of the Mylan Shares is considered to perform activities with respect to the Mylan Shares that go beyond ordinary asset management (in Dutch:
normaal, actief vermogensbeheer
) or derives
benefits from the Mylan Shares that are taxable as benefits from other activities (in Dutch
resultaat uit overige werkzaamheden
).
|
Income from savings and investments:
If the above-mentioned conditions (a) and (b) do not apply to the individual holder of Mylan Shares, the
Mylan Shares are recognized as investment assets and included as such in such holders net investment asset base
(
in Dutch:
rendementsgrondslag
). Such holder will be taxed annually on a deemed income of 4 percent of
his or her net investment assets for the year at an income tax rate of 30 percent. The net investment assets for the year are the fair market value of the investment assets less the allowable liabilities on January 1 of the relevant calendar
year. A tax free allowance may be available. Actual benefits derived from the Mylan Shares are as such not subject to Netherlands income tax.
A law has
been enacted, pursuant to which, beginning on January 1, 2017, the taxation of income from savings and investments will be amended and the deemed income will no longer be fixed at 4 percent, but instead a variable return between, as currently
proposed, 2.9 percent and 5.5 percent (depending on the amount of the individual holders net investment assets for the year) will be applied. However, at the request of the Dutch Parliament the Dutch Ministry of Finance will also review, in
the course of 2016, whether the taxation of income from savings and investments can be based on the actual income and/or gains realized in respect of the Mylan Shares instead of a deemed return.
Netherlands Resident Entities
Any benefit derived or
deemed to be derived from the Mylan Shares held by Netherlands Resident Entities, including any capital gains realized on the disposal thereof, will generally be subject to Netherlands corporate income tax at a rate of 25 percent (a corporate income
tax rate of 20 percent applies with respect to taxable profits up to 200,000).
Non-residents of the Netherlands
A holder of Mylan Shares will not be subject to Netherlands taxes on income or on capital gains in respect of any payment under Mylan Shares or any gain
realized on the disposal or deemed disposal of Mylan Shares, provided that:
|
(i)
|
such holder is neither a resident nor deemed to be resident in the Netherlands for Netherlands tax purposes;
|
|
(ii)
|
such holder does not have an interest in an enterprise or a deemed enterprise (statutorily defined term) which, in whole or in part, is either effectively managed in the Netherlands or is carried out through a permanent
establishment, a deemed permanent establishment or a permanent representative in the Netherlands and to which enterprise or part of an enterprise the Mylan Shares are attributable; and
|
72
|
(iii)
|
in the event such holder is an individual, such holder does not carry out any activities in the Netherlands with respect to the Mylan Shares that go beyond ordinary asset management and does not derive benefits from the
Mylan Shares that are taxable as benefits from other activities in the Netherlands.
|
Other Taxes and Duties
No Netherlands VAT and no Netherlands registration tax, stamp duty or any other similar documentary tax or duty will be payable by a holder of Meda shares or a
holder of Mylan Shares on any payment in consideration for the exchange of Meda shares for Mylan Shares and cash pursuant to the Offer or a compulsory acquisition or for the holding or disposal of the Mylan Shares.
THE NETHERLANDS TAX CONSIDERATIONS DISCUSSED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACH HOLDER OF MEDA SHARES OR MYLAN SHARES SHOULD CONSULT HIS OR HER
OWN TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES OF THE OFFER AND A COMPULSORY ACQUISITION THAT MAY APPLY TO THE HOLDER.
United Kingdom Tax
Considerations
Tax Consequences of the Offer and a Compulsory Acquisition for Holders of Meda shares
Scope of Discussion
The comments set out below summarize
certain aspects of the U.K. tax treatment of certain holders of Meda shares of the Offer and a compulsory acquisition, and do not purport to be a complete analysis of all tax considerations relating to the Offer and a compulsory acquisition. They
are based on current U.K. legislation and what is understood to be current HM Revenue and Customs (HMRC) practice, both of which are subject to change, possibly with retroactive effect.
The comments are intended as a general guide and do not deal with certain types of holders of Meda shares such as charities, dealers in securities, persons
who have or could be treated for tax purposes as having acquired their Meda shares by reason of their employment, collective investment schemes, persons subject to U.K. tax on the remittance basis, insurance companies and persons who hold more than
5 percent of Medas shares (either alone or with persons connected with them).
References below to U.K. Holders are to holders of Meda
shares who are resident for tax purposes in the United Kingdom, who hold their Meda shares as an investment (other than under a personal equity plan or individual savings account) and who are the absolute beneficial owners of their Meda shares.
Non-U.K. Holders are persons who are not resident for tax purposes in the United Kingdom, have not within the past five years been resident or ordinarily resident for tax purposes in the United Kingdom and are not carrying on a trade (or
profession or vocation) in the United Kingdom.
Taxation of Chargeable Gains (CGT)U.K. Holders
To the extent that a U.K. Holder receives Mylan Shares under the terms of the Offer or a compulsory acquisition, he is not expected to be treated as having
made a disposal of his Meda shares for CGT purposes. Instead, the Mylan Shares so received should generally be treated as the same asset, acquired at the same time and for the same consideration, as the Meda shares.
To the extent that a U.K. Holder receives cash under the terms of the Offer or compulsory acquisition, he should be treated as making a disposal or part
disposal of the relevant Meda shares for CGT purposes which may, depending on the holders individual circumstances (including the availability of exemptions, reliefs and allowable losses), give rise to a liability to CGT.
73
Taxation of Chargeable GainsNon-U.K. Holders
Non-U.K. Holders should not be subject to CGT in respect of the Offer or a compulsory acquisition.
Stamp Duty and Stamp Duty Reserve Tax (SDRT)
No stamp duty or SDRT should be payable by holders of Meda shares in respect of the Offer or a compulsory acquisition.
Tax Consequences of Holding Mylan Shares
Scope
of Discussion
The comments set out below summarize certain aspects of the U.K. tax treatment of certain holders of Mylan Shares after the Offer or a
compulsory acquisition and do not purport to be a complete analysis of all tax considerations relating to the Mylan Shares. They are based on current U.K. legislation and what is understood to be current HMRC practice, both of which are subject to
change, possibly with retroactive effect.
The comments are intended as a general guide and apply only to holders of Mylan Shares who are resident for tax
purposes in the United Kingdom, who hold their Mylan Shares as an investment (other than under a personal equity plan or individual savings account) and who are the absolute beneficial owners of their Mylan Shares. The comments do not deal with
certain types of holders of Mylan Shares such as charities, dealers in securities, persons who have or could be treated for tax purposes as having acquired their Mylan Shares by reason of their employment, collective investment schemes, persons
subject to U.K. tax on the remittance basis and insurance companies. They assume that Mylan is, and will continue to be, tax resident solely in the United Kingdom (including for the purposes of applicable tax treaties).
Taxation of DividendsIndividuals
Provisions
announced in the U.K. Summer Budget 2015 and contained in draft Finance Bill clauses published by the U.K. Government on December 9, 2015 will, if passed by the U.K. Parliament, change the tax treatment of dividends in the hands of shareholders
who are individuals where a dividend is paid on or after April 6, 2016.
General
Assuming that the draft provisions are duly enacted without relevant changes, the tax treatment of will be as follows.
|
|
|
Dividends will not carry a tax credit.
|
|
|
|
All dividends received by an individual shareholder from Mylan (or from other sources) will, except to the extent that they are earned through an individual savings account (ISA), self-invested pension plan or other
regime which exempts the dividends from tax, form part of the shareholders total income for income tax purposes and will represent the highest part of that income.
|
|
|
|
A nil rate of income tax will apply to the first £5,000 of taxable dividend income received by an individual holder of Mylan Shares in a tax year (the Nil Rate Amount), regardless of what tax rate
would otherwise apply to that dividend income.
|
|
|
|
Any taxable dividend income received by an individual shareholder in a tax year in excess of the Nil Rate Amount will be taxed at a special rate, as set out below.
|
|
|
|
That tax will be applied to the amount of the dividend income actually received by the individual holder of Mylan Shares (rather than to a grossed-up amount).
|
74
Dividend Income in excess of the Nil Rate Amount
Where a shareholders taxable dividend income for a tax year exceeds the Nil Rate Amount, the excess amount (the Relevant Dividend Income)
will be subject to income tax:
|
|
|
at the rate of 7.5 percent, to the extent that the Relevant Dividend Income falls below the threshold for the higher rate of income tax;
|
|
|
|
at the rate of 32.5 percent, to the extent that the Relevant Dividend Income falls above the threshold for the higher rate of income tax but below the threshold for the additional rate of income tax; and
|
|
|
|
at the rate of 38.1 percent, to the extent that the Relevant Dividend Income falls above the threshold for the additional rate of income tax.
|
In determining whether and, if so, to what extent the Relevant Dividend Income falls above or below the threshold for the higher rate of income tax or, as the
case may be, the additional rate of income tax, the shareholders total taxable dividend income for the tax year in question (including the part within the Nil Rate Amount) will, as noted above, be treated as the highest part of the
shareholders total income for income tax purposes.
Taxation of dividendsCompanies
Holders of Mylan Shares within the charge to U.K. corporation tax which are small companies (for the purposes of U.K. taxation of dividends) will
not generally be subject to tax on dividends paid on their Mylan Shares.
Other holders of Mylan Shares within the charge to U.K. corporation tax will not
be subject to tax on dividends paid on their Mylan Shares so long as (i) the dividends fall within an exempt class, (ii) the dividends do not fall within certain anti-avoidance provisions and (iii) the holder of Mylan Shares has not
elected for the dividends not to be exempt. It would normally be expected that dividends paid on the Mylan Shares would fall within an exempt class; for example, dividends paid in respect of portfolio holdings (that is, where the recipient owns less
than 10 percent of the issued share capital of the payer or any class of that share capital) will do so.
Taxation of Chargeable Gains
A disposal or deemed disposal of Mylan Shares may, depending on the particular circumstances of the holder and subject to any available exemptions or reliefs,
give rise to a chargeable gain or an allowable loss for CGT purposes.
Individuals
A holder of Mylan Shares who is an individual resident in the United Kingdom for tax purposes and whose total taxable gains and income in a given tax year,
including any gains made on the disposal or deemed disposal of his Mylan Shares, are less than or equal to the upper limit of the income tax basic rate band applicable in respect of that tax year (the Band Limit) will generally be
subject to CGT at a flat rate of 18 percent in respect of any gain arising on a disposal or deemed disposal of his Mylan Shares.
A holder of Mylan Shares
who is an individual resident in the United Kingdom for tax purposes and whose total taxable gains and income in a given tax year, including any gains made on the disposal or deemed disposal of his Mylan Shares, are more than the Band Limit will
generally be subject to CGT at a flat rate of 18 percent in respect of any gain arising on a disposal or deemed disposal of his Mylan Shares (to the extent that, when added to the holders other taxable gains and income in that tax year, the
gain is less than or equal to the Band Limit) and at a flat rate of 28 percent in respect of the remainder of the gain arising on a disposal or deemed disposal of his Mylan Shares.
75
No indexation allowance will be available to an individual holder of Mylan Shares in respect of any disposal or
deemed disposal of Mylan Shares. However, each individual has an annual exemption, such that CGT is chargeable only on gains arising from all sources during the tax year in excess of this figure. The annual exemption is £11,100 for the tax
year 2015/2016.
Companies
For holders of Mylan
Shares within the charge to U.K. corporation tax, indexation allowance may be available in respect of the period of ownership of the Mylan Shares (together with any preceding period of ownership of Meda shares) to reduce any chargeable gain arising
(but not to create or increase any allowable loss).
Stamp Duty and SDRT
No SDRT will be payable in respect of any transfer of, or agreement to transfer, Mylan Shares after the Offer or compulsory acquisition, assuming that they are
not registered in a register kept in the United Kingdom by or on behalf of Mylan. Provided that any instrument of transfer is executed outside the United Kingdom and does not relate to any property situate, or to any matter or thing done or to be
done, in the United Kingdom, no stamp duty will arise in respect of a transfer of Mylan Shares after the Offer or compulsory acquisition.
THE UNITED
KINGDOM TAX CONSIDERATIONS DISCUSSED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACH HOLDER OF MEDA SHARES OR MYLAN SHARES SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES OF THE OFFER AND A COMPULSORY ACQUISITION THAT MAY
APPLY TO THE HOLDER.
Danish Tax Considerations
Scope of Discussion
Below is a summary of certain
material Danish tax issues related to the Offer for private individuals and limited liability companies that are residents in Denmark for tax purposes (unless otherwise stated) and that hold Meda shares. This summary is based on current legislation
in Denmark as of the date of this prospectus and is subject to any changes in law and the interpretation and application thereof, which changes could be made with retroactive effect.
The following summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to holders of Meda shares or Mylan
Shares and does not purport to deal with the tax consequences applicable to all categories of shareholders. Each shareholder is advised to consult his or her own tax advisor as to the tax consequences relating to the holders particular
circumstances that could arise from the Offer, including the applicability and effect of foreign tax legislation (including regulations) and provisions in tax treaties.
This summary does not cover:
|
|
|
situations where shares are held as current assets in business operations;
|
|
|
|
situations where shares are held by a limited partnership or a partnership;
|
|
|
|
Pension funds and pension savers subject to taxation according to the Danish Act on Taxation of Pension Yield (in Danish
pensionsafkatbeskatningsloven
);
|
|
|
|
the special rules regarding tax-free capital gains (including non-deductible capital losses) and dividends that may be applicable e.g. when the investor holds shares representing more than 10 percent of the voting
rights or the capital or holds shares that are deemed to be held for business purposes (for tax purposes);
|
76
|
|
|
credit of foreign taxes;
|
|
|
|
foreign companies conducting business through a permanent establishment in Denmark.
|
Disposal of Meda
shares against cash
For shareholders in Meda that accept the Offer and thereby dispose of their Meda shares, a liability for capital gains
taxation will occur.
Private individuals
For
private individuals resident in Denmark for tax purposes, gains on listed shares are taxed as share income (in Danish
aktieindkomst
). Share income is taxed at a rate of 27 percent up to Danish kroner (DKK) 50,600 (in
2016) (for married couples an aggregate of DKK 101,200), and then at a rate of 42 percent.
Loss on listed shares can be offset in gains and dividends
from other listed shares. Any excess loss can be carried forward for an indefinite period of time.
The capital gain or the capital loss is computed as
the difference between the consideration, less selling expenses, and the acquisition value. The acquisition value for all shares of the same class and type shall be added together irrespective of the time of acquisition and computed collectively in
accordance with the so-called average method (in Danish
gennemsnitsmetoden
).
Limited liability companies
For limited liability companies gains and losses on the listed Meda shares are included in the calculation of taxable income pursuant to the mark-to-market
principle. The tax rate is 22 percent.
A gain or a loss is calculated as the difference between the value of the shares at the beginning and the end of
the income year, beginning with the difference between the acquisition sum of the shares and the value of the shares at the end of the same income year. Upon realization of the shares by disposal, the taxable income of that income year equals the
difference between the value of the shares at the beginning of the income year and the value of the shares at realization less selling expenses. If the shares have been acquired and realized in the same income year, the taxable income equals the
difference between the acquisition sum and the value at realization.
Disposal of Meda shares against shares in Mylan
Private individuals holding
Private individuals that are
residents of Denmark for tax purposes who accept the Offer and acquire Mylan Shares against Meda shares should be considered to have disposed of their Meda shares.
However, no potential capital gain or deductible capital loss is considered to arise upon the disposal pursuant to the rules on roll-over-relief. Based on the
assumption that the sale of the Meda shares to Mylan will occur on market terms and that Mylan by the end of the calendar year during which the disposal of the Meda shares was completed, will hold Meda shares representing more than in aggregate 50
percent of the total votes in Meda, the rules on roll-over-relief should be applicable. Private individuals that are residents of Denmark for tax purposes should under such circumstances generally be deemed to have acquired the shares in Mylan at a
purchase price and at a purchase time corresponding to the acquisition value and the purchase time of the Meda shares.
Limited liability companies
Limited liability companies that are residents of Denmark for tax purposes and hold Meda shares and accept the Offer and acquire Mylan Shares against
Meda shares should be considered to have disposed of their Meda shares.
77
Gains and losses on the listed Meda shares are included in the calculation of taxable income pursuant to the
mark-to-market principle and future gains and losses on listed the shares in Mylan are also taxed pursuant to the mark-to-market principle. This applies irrespective of a generally achieved deferred taxation of the share exchange. Consequently a
generally achieved deferred taxation should not influence on the taxation of Danish resident limited liability companies since both the Meda shares and the acquired Mylan Shares are taxed based on the mark-to-market principle.
Taxation of Mylan shareholders following the completion of the Offer
Private individuals
For private individuals resident in
Denmark for tax purposes, any subsequent gain on the acquired Mylan Shares is taxed as share income. Share income is taxed at a rate of 27 percent up to DKK 50,600 (in 2016) (for married couples an aggregate of DKK 101.200), and then at a rate of 42
percent.
Capital gains and capital losses are calculated and offset in the same way as described above under Disposal of Meda shares against
cash. Assuming that a tax deferral is available for the private individual in connection with the acquisition of shares in Mylan, the Mylan Shares are considered acquired at a purchase price and purchase time corresponding to the acquisition
value and the purchase time of the Meda shares.
For private individuals resident in Denmark for tax purposes receiving dividends, a preliminary tax is
normally withheld on such dividends and if the preliminary tax withheld exceeds the withholding tax rate pursuant to the applicable tax treaty, the shareholder can request a refund of withholding tax exceeding the applicable tax treaty withholding
tax rate.
Limited liability companies
For limited
liability companies any subsequent gain or loss on the acquired shares in Mylan is taxed pursuant to the mark-to-market principle in the same way as described above under Disposal of Meda shares against cash.
Other Taxes and Duties
No Danish VAT and no
Danish registration tax, stamp duty or any other similar documentary tax or duty will be payable by a holder of Meda shares or a holder of Mylan Shares on any payment in consideration for the exchange of Meda shares for Mylan Shares and cash
pursuant to the Offer or a compulsory acquisition or for the holding or disposal of the Mylan Shares.
Shareholders not resident in Denmark for tax
purposes
Shareholders not resident in Denmark for tax purposes are generally not liable for capital gains taxation in Denmark upon disposals of
shares unless the shares can be allocated to a permanent establishment in Denmark of the foreign shareholder. The mere investment in shares does not constitute a permanent establishment of the foreign investor.
THE DANISH TAX CONSIDERATIONS SUMMARIZED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACH MEDA SHAREHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO THE
PARTICULAR CONSEQUENCES OF THE OFFER AND A COMPULSORY ACQUISITION THAT MAY APPLY TO SUCH SHAREHOLDER.
78
Irish Tax Considerations
Scope of Discussion
The following discussion
describes the material Irish tax consequences of (a) the Offer and a compulsory acquisition which may be applicable to certain beneficial owners of Meda shares and (b) disposing of Mylan Shares received in the proposed transaction. The
summary is based upon Irish tax laws and the practice of the Irish Revenue Commissioners in effect on the date of this prospectus. Changes in law and/or administrative practice may result in alteration of the tax considerations described below. The
summary does not constitute tax advice and is intended only as a general guide.
Also it is not exhaustive and shareholders should consult their own tax
advisors about the Irish tax consequences (and tax consequences under the laws of other relevant jurisdictions) of the transactions and of the acquisition, ownership and disposal of Mylan Shares. The summary applies only to shareholders who
beneficially own Meda shares as capital assets and who will beneficially own Mylan Shares received in the Offer or a compulsory acquisition as capital assets and does not apply to other categories of shareholders, such as dealers in securities,
trustees, insurance companies, collective investment schemes, pension funds or shareholders who have, or who are deemed to have, acquired their Meda shares or Mylan Shares by virtue of an Irish office or employment (performed or carried on in
Ireland).
Irish Chargeable Gains Tax (CGT)
The Offer and a Compulsory AcquisitionIrish Holders
A shareholder who is resident or ordinarily resident for tax purposes in Ireland or who holds its shares in connection with a trade or business carried on by
such shareholder in Ireland through a branch or agency is referred to herein as an Irish Holder.
Meda shareholders who are Irish Holders will
be subject to Irish CGT in respect of the Offer or a compulsory acquisition.
As share for share roll-over relief should apply to the Mylan
Shares issued pursuant to the Offer or a compulsory acquisition:
|
a.
|
an Irish Holders holding of Mylan Shares received pursuant to the Offer or a compulsory acquisition should be treated as the same asset, acquired at the same time and for the same consideration, as the holding of
Meda shares held by that Irish Holder immediately prior to the Offer or a compulsory acquisition; and
|
|
b.
|
an Irish Holder should be treated as having made a part disposal of its holding of Meda shares for any cash received pursuant to the Offer or a compulsory acquisition (including cash received in respect of any
fractional entitlement) which may, subject to the Irish Holders individual circumstances and any available exemption or relief, give rise to a chargeable gain (or allowable loss) for the purposes of Irish CGT.
|
The amount of Irish CGT, if any, payable as a consequence of the Offer or a compulsory acquisition by an Irish Holder will depend on his or her own personal
tax position. No Irish CGT should be payable on any chargeable gain realized as a result of the Offer or a compulsory acquisition if the amount of the net chargeable gains realized by an Irish Holder, when aggregated with other net chargeable gains
realized by that Irish Holder in the year of assessment (and after taking account of allowable losses), does not exceed the annual exemption (EUR() 1,270 for 2016). Broadly, any gains in excess of this amount will be taxed at a rate of 33
percent. Indexation allowance will not be available in respect of expenditure incurred on or after January 1, 2003 or in respect of periods of ownership after December 31, 2002.
79
For the purposes of computing Irish CGT, euro amounts must generally be used. Where an Irish Holder has given or
received a non-euro amount in acquiring or being treated as disposing of assets, such euro amounts must be determined by reference to the relevant rate of exchange at the time of the relevant Irish CGT event. An Irish Holder receiving a dollar
amount in the Offer or a compulsory acquisition or on another disposal of Mylan Shares will therefore be required to convert that sum into euro by reference to the relevant rate of exchange as at the date on which the Offer or a compulsory
acquisition of those shares becomes effective in accordance with its terms.
The Offer and a Compulsory AcquisitionNon-Irish Holders
Meda shareholders who are not Irish Holders should not be within the charge to Irish CGT on the disposal of their Meda shares, or on the receipt
of Mylan Shares and cash pursuant to the Offer or a compulsory acquisition.
After the Offer or a Compulsory AcquisitionIrish Holders
Mylan shareholders that are Irish Holders will be subject to Irish CGT on a future disposal of their Mylan Shares. Where an Irish Holder disposes
of Mylan Shares and those Mylan Shares were received in the Offer or a compulsory acquisition the base cost for Irish CGT purposes that was rolled-over from the Meda shares into the Mylan Shares should be available as a deduction in
computing any gain on such disposal.
After the Offer or a Compulsory AcquisitionNon-Irish Holders
Mylan shareholders who are not Irish Holders should not be liable for Irish CGT realized on a subsequent disposal of their Mylan Shares.
Stamp Duty
No Irish stamp duty will be payable by
Meda shareholders in respect of the Offer or a compulsory acquisition. No Irish stamp duty will be payable in respect of a cash sale of Mylan Shares after the Offer or a compulsory acquisition.
THE IRISH TAX CONSIDERATIONS SUMMARIZED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACH MEDA SHAREHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO THE
PARTICULAR CONSEQUENCES OF THE OFFER AND A COMPULSORY ACQUISITION THAT MAY APPLY TO SUCH SHAREHOLDER.
Irrevocable
Undertakings to Accept the Offer; Shareholder Agreements
Irrevocable Undertakings to Accept the Offer
Mylan has received irrevocable undertakings to accept the Offer from (1) Stena in respect of 75,652,948 Meda shares, representing approximately 21 percent
of the outstanding shares and votes of Meda, and (2) Fidim in respect of 33,016,286 Meda shares, representing approximately 9 percent of the outstanding shares and votes of Meda. The Stena Irrevocable Undertaking and the Fidim Irrevocable
Undertaking relate to Stenas and Fidims entire respective holdings of Meda shares. Each of Stena and Fidim has undertaken to accept the Offer no later than five business days prior to the expiry of the initial acceptance period for the
Offer. The irrevocable undertakings given by Stena and Fidim shall be terminated if (i) a third party, prior to the Offer having been declared unconditional, makes a public offer to acquire all outstanding Meda shares at an offer value
exceeding the value of the Offer by more than SEK 15 per share of Meda, (ii) the Offer is withdrawn, (iii) the Offer is not declared unconditional on or before February 10, 2017 or (iv) Mylan commits a material breach of
applicable laws and regulations relating to the Offer.
80
The foregoing summary descriptions of the Stena Irrevocable Undertaking and the Fidim Irrevocable Undertaking are
subject to and qualified in their entirety by reference to such irrevocable undertakings, each of which is incorporated by reference herein and is filed as an exhibit to the registration statement of which this prospectus forms a part.
Shareholder Agreements
In connection with the Offer,
Mylan entered into the Stena Shareholder Agreement and the Fidim Shareholder Agreement, which set forth certain terms and conditions concerning the ownership of Mylan Shares by Stena and Fidim, respectively. Each shareholder agreement imposes
certain restrictions on the applicable shareholder, including prohibiting transfers of Mylan Shares to competitors of Mylan and to activist investors (as defined in such shareholder agreement), as well as certain customary standstill limitations.
Each shareholder agreement also imposes non-competition, non-solicitation and non-hire restrictions on the applicable shareholder for a period of 24 months after the Offer is declared unconditional. Each of Stena and Fidim has agreed pursuant to its
applicable shareholder agreement to vote its Mylan Shares in accordance with the recommendation of the Mylan Board in the period up to and including the 180th day following settlement of the Offer and not vote its Mylan Shares against the
recommendation of the Mylan Board in the period after the 180th day following settlement of the Offer, in each case subject to certain exceptions relating to significant corporate transactions. Each of Stena and Fidim has also agreed not to dispose
of any Mylan Shares that it owns to any third party during the period up to and including the 180th day following the settlement of the Offer.
The
foregoing summary descriptions of the Stena Shareholder Agreement and the Fidim Shareholder Agreement are subject to and qualified in their entirety by reference to such shareholder agreements, each of which is incorporated by reference herein and
is filed as an exhibit to the registration statement of which this prospectus forms a part.
Appraisal/Dissenters
Rights
Under Swedish law and the Meda Articles, Meda shareholders are not entitled to any rights to seek appraisal of their Meda shares in connection
with the Offer, though certain related rights exist in connection with the compulsory acquisition procedure described under Compulsory Acquisition beginning on page 59 of this prospectus.
Meda Share-Based Awards
The
Offer does not include any share-based awards granted by Meda to its employees. Mylan intends to procure fair treatment in connection with the transaction for holders of such share-based awards.
Listing of Mylan Shares; Delisting of Meda Shares
The Mylan Shares to be issued in connection with the Offer will be listed on NASDAQ in the United States and on the TASE in Israel, in each case under the
ticker symbol MYL. Trading of the Mylan Shares delivered in connection with the Offer is expected to commence on NASDAQ and the TASE on the first trading day after settlement of the Offer.
If Mylan becomes the owner of more than 90 percent of the Meda shares, Mylan intends to promote the delisting of the Meda shares from Nasdaq Stockholm.
Financing of the Offer; Source and Amount of Funds
The Offer is fully financed.
81
The aggregate cash consideration payable in the Offer for all Meda shares will be approximately SEK 48.2 billion
(USD 5.7 billion).
9
The cash portion of the Offer consideration will be financed by the Bridge Credit Facility. Subject to market conditions, Mylan expects to refinance or reduce advances under
the Bridge Credit Facility from proceeds of alternative financing sources.
Bridge Credit Facility
The Bridge Credit Agreement incorporated by reference herein contains representations and warranties by Mylan. Those representations and warranties were
made solely for the benefit of the other parties to the Bridge Credit Agreement and (i) were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to Mylan if those statements prove to be
inaccurate; (ii) may have been qualified in the Bridge Credit Agreement by disclosures that were made to the other parties in connection with the negotiation of the Bridge Credit Agreement; (iii) may apply contract standards of
materiality that are different from materiality under the applicable securities laws; and (iv) were made only as of the date of the Bridge Credit Agreement or such other date or dates as may be specified in the Bridge
Credit Agreement.
In connection with the Offer, on February 10, 2016 Mylan entered into the Bridge Credit Agreement, among Mylan N.V., as
borrower, Mylan Inc., as guarantor, Deutsche Bank AG Cayman Islands Branch, as administrative agent and a lender, Goldman Sachs Bank USA, as a lender, Goldman Sachs Lending Partners LLC, as a lender, and other lenders party thereto from time to
time. The Bridge Credit Agreement provides for the Bridge Credit Facility consisting of a Tranche A Loan under which Mylan may obtain loans up to an aggregate amount of $6.0 billion (the Loans). The proceeds of the Loans will be applied
solely to finance the proposed acquisition of Meda shares and pay other costs associated with the acquisition, the Bridge Credit Agreement and related transactions. The Loans will bear interest at LIBOR (determined in accordance with the Bridge
Credit Agreement), if Mylan chooses to make LIBOR borrowings, or at a base rate (determined in accordance with the Bridge Credit Agreement), in each case plus an applicable margin. The applicable margin for borrowings will be determined by reference
to a grid based on Mylans Debt Rating (as defined in the Bridge Credit Agreement), and such applicable margin will range from 0.125 percent to 1.225 percent per annum with respect to base rate borrowings and 1.125 percent to 2.225 percent per
annum with respect to LIBOR borrowings, in each case subject to increase by 0.25 percent per annum, 0.25 percent per annum and 0.50 percent per annum on the date that is 90, 180 and 270 days, respectively, after the funding date. The commitments
under the Bridge Credit Agreement will be available until the earliest to occur of February 8, 2017 and certain events relating to the completion or termination of the Offer set forth in the Bridge Credit Agreement. The Loans will be unsecured
and will be guaranteed by Mylan Inc. The Loans will mature on the day that is 364 days after the funding date. The Bridge Credit Agreement also provided for commitments in respect of Tranche B loans in an aggregate amount of up to $4.05 billion to
be applied if necessary to prepay the Revolving Credit Agreement, the 2014 Term Credit Agreement and the 2015 Term Credit Agreement and to pay fees and expenses relating thereto. The commitments in respect of such Tranche B loans were permanently
terminated in connection with the effectiveness of certain amendments to the Revolving Credit Agreement, the 2014 Term Credit Agreement and the 2015 Term Credit Agreement.
The foregoing summary description of the Bridge Credit Agreement and the transactions contemplated thereby is subject to and qualified in its entirety by
reference to the Bridge Credit Agreement, which is incorporated by reference herein and is filed as an exhibit to the registration statement of which this prospectus forms a part.
9
|
Based on (1) the Announcement Exchange Rate, (2) 365,467,371 outstanding Meda shares (the number of outstanding Meda shares as of both the date of the announcement of the Offer and the most recent trading
day prior to the date of this prospectus) and (3) 80 percent of the total Offer consideration being paid in cash.
|
82
Security Ownership of Certain Beneficial Owners and Management of Mylan
The security ownership of certain beneficial owners and management of Mylan will be incorporated by reference into this prospectus from an amendment to
Mylans Annual Report on Form 10-K for the year ended December 31, 2015, originally filed on February 16, 2016, which will be filed no later than April 29, 2016.
Regulatory Approvals
Antitrust Clearance
Mylans obligation to
consummate the Offer is subject to the receipt of all necessary regulatory, governmental or similar clearances, approvals and decisions, including from competition authorities, in each case on terms which, in Mylans opinion, are acceptable.
However, pursuant to the Swedish Takeover Rules, Mylan is only permitted to withdraw the Offer on the basis of actions required to be taken to obtain regulatory, governmental or similar clearances if such actions are of material importance to
Mylans acquisition of Meda.
On February 29, 2016, Mylan filed the requisite notification and report form with the Federal Trade Commission and
the Antitrust Division of the Department of Justice in the U.S. On March 1, 2016, Meda filed the requisite notification and report form with the Federal Trade Commission and the Antitrust Division of the Department of Justice in the U.S. Mylan
plans to file formal antitrust notifications with the European Commission in the European Union, the Federal Antimonopoly Service in Russia and the Turkish Competition Authority, in each case as promptly as practicable.
Mylan will obtain the relevant approvals, or the applicable waiting periods will have expired, under the antitrust and competition laws of the countries where
filings or approvals are required prior to the completion of the Offer. Mylan cannot assure you that a challenge to the completion of the Offer will not be made or that, if a challenge is made, it will not succeed.
Certain Relationships with Meda and Interests of Mylan in the Offer
Except as set forth in this prospectus, neither we nor any of our affiliates has any material interest, direct or indirect, by security holdings or otherwise,
in the transaction. Except as set forth in this prospectus, neither Meda nor any of Medas affiliates, has any material interest, direct or indirect, by security holdings or otherwise, in the transaction.
Accounting Treatment
ASC
805
requires the use of the acquisition method of accounting for business combinations. In applying the acquisition method, it is necessary to identify the accounting acquiree and accounting acquiror. In a business combination effected through
an exchange of equity interest, such as the proposed acquisition of Meda, the entity that issues the interest (Mylan in this case) is generally the acquiring entity. However, there are other factors in
ASC 805
which must also be considered.
Mylan management considered these other factors and determined that Mylan will be considered the acquiror for accounting purposes. The total purchase price will be allocated to the identifiable assets acquired and liabilities assumed from Meda based
on their fair values as of the date of the completion of the transaction, with any excess being allocated to goodwill. Reported financial condition and results of operations of Mylan issued after completion of the transaction will reflect
Medas balances and results after completion of the transaction, but will not be restated retroactively to reflect the historical financial position or results of operations of Meda. Following the completion of the transaction, the earnings of
the Combined Company will reflect purchase accounting adjustments; for example, amortization of identified intangible assets or other impacts from the purchase price allocation.
83
I
NFORMATION REGARDING MEDA
The following summary discussion of Medas business, management and operations reflects Medas views and should be read in conjunction with the
risks discussed in the section entitled Risk Factors Related to Meda and Medas consolidated financial statements and the notes thereto included elsewhere in this prospectus.
Overview
Meda is a leading specialty pharmaceutical
company with a diversified product portfolio. Medas product portfolio is divided in two primary areas:
|
|
|
Prescription (Rx), which totaled 62 percent of net sales in 2015. This product area comprises original prescription pharmaceuticals and specialty products focusing on the respiratory, dermatology, pain and inflammation
therapeutic categories; and
|
|
|
|
Non prescription (Cx ) / Over the counter (OTC), which totaled 36 percent of net sales in 2015. Cx / OTC drugs are a common first step within self-treatment and preventive health care.
|
|
|
|
Other sales accounted for 2 percent net sales in 2015.
|
Meda Operations in the World
Meda is headquartered in Solna, Sweden. Meda has six proprietary production units in Ireland, France, Germany, Italy and the U.S. During 2015, Western Europe
(comprised of western Europe, excluding the Baltics, Poland, Czech Republic, Slovakia and Hungary) accounted for 62 percent of Medas net sales, the U.S. accounted for 17 percent of Medas net sales, emerging markets accounted for 19
percent of Medas net sales and other sales accounted for 2 percent of Medas net sales. Emerging markets is the fastest growing region with a pro forma organic growth in net sales of 7 percent in 2015. See Meda Managements
Discussion and Analysis of Financial Position and Results of Operations of MedaNon-IFRS Financial Measures
Targets and Strategy
Medas business concept is to offer cost-effective and clinically proven products. Based on a broad product portfolio and strong cash flows, Meda has been
able to identify, secure access to, integrate and commercialize pharmaceutical products in its targeted therapeutic categories (primarily respiratory, dermatology and pain and inflammation) and the Cx / OTC market segment.
Sales and Marketing
Meda believes that among its
strongest assets is the ability to quickly and effectively integrate acquired operations and commercialize new products globally. Key activities are primarily development of existing products, manufacturing and supply, and sales and marketing.
Acquisition and Further Development of Products
Meda does not conduct any in-house, early-stage pharmaceutical development and is primarily active in late-stage clinical development. Meda mainly acquires new
products through the acquisition of companies, product rights and through partnerships with other pharmaceutical companies. Meda does, however, improve the properties of existing drugs or substances in a variety of ways:
|
|
|
New improved formulations, such as a pen in addition to cotton swab for the medical device product Endwarts
®
, which contains formic acid for the treatment of
warts.
|
|
|
|
Development of combination products, such as Dymista
®
(azelastine and fluticasone propionate) for allergic rhinitis.
|
84
|
|
|
Globalization and regulatory approval of drugs, such as Novolizer
®
, Acnatac
®
, Zyclara
®
and Dymista
®
, in new countries/regions.
|
Medas development work can be described as market and patient-adapted product development in late clinical phases.
Two-Pronged Growth Strategy
Medas growth
strategy involves a combination of organic growth and acquisitions. Acquisitions have historically been the main driver of Medas expansion and have been supported on an ongoing basis by Medas investments in organic product and market
development. The combined results are a significant product portfolio in respiratory, dermatology, pain and inflammation and Cx / OTC.
Between 2000 and
2015, Meda made more than 30 major acquisitions of companies and product rights. Several strategic acquisitions were completed in the period from 2005 to 2008, including the German pharmaceutical group Viatris, 3Ms European pharmaceuticals
division, the U.S. specialty pharmaceutical company MedPointe and Valeants European pharmaceutical division. In 2010, Meda acquired the U.S. specialty pharmaceutical company, Alaven, and subsequently acquired the Nordic OTC company, Antula, in
2011. During 2013, Meda acquired the U.S. development company, Acton Pharmaceuticals, Inc., which included its proprietary product Aerospan
®
. Meda further acquired all global rights to EB24
®
with its acquisition of ZpearPoint AS.
In 2014, Meda completed the acquisition of Rottapharm.
Greater Focus on Organic Growth
Since 2012, in
addition to the Cx / OTC portfolio and emerging markets, Meda has focused on a number of selected therapeutic categories, particularly respiratory, dermatology and pain and inflammation. This has involved a greater focus on organic growth. In 2012
and 2013, new products, such as Dymista
®
and Zyclara
®
, were launched in these therapeutic focus areas.
Several products in the Nordic OTC portfolio were launched in new markets in 2012. In 2015, Meda also increased its market investments to expand within the Cx
/OTC area and drive growth in emerging markets following the Rottapharm transaction.
Products
Prescription Drugsthree primary therapy areas
Meda focuses primarily on three therapeutic categoriesrespiratory, dermatology and pain and inflammation. Meda has stated that its products are meeting a
growing need among patients and healthcare providers. This need is driven by factors such as the growing incidence of allergies, particularly in Western Europe and North America, but also in emerging markets. Dermatology includes diseases such as
skin cancer and its precursors, acne and eczema, which are all common conditions experiencing an increase in prevalence. This is partly due to environmental factors such as sun exposure. The pain and inflammation therapeutic area is experiencing
growth in several different indications resulting in rising costs for customers.
Respiratory (Allergies and Asthma)15 percent 2015 net sales
(across Rx, Cx and OTC)
Allergic rhinitis is one form of allergy and is considered a global epidemic, affecting some 500 million people
worldwide, of which around 180 million are in Western Europe, U.S. and Japan.
Asthma is a chronic condition affecting the respiratory tract and
lungs. It is the most common chronic disease among children. Asthma affects some 300 million individuals worldwide.
85
Dermatology22 percent 2015 net sales (across Rx, Cx and OTC)
The skin is the bodys largest organ and has many vital functions, such as protection from microbes.
Skin diseases are common in all age groups and in all parts of the world. Some of the most common skin diseases are eczema, psoriasis, acne and skin cancer.
Pain and Inflammation14 percent 2015 net sales (across Rx, Cx and OTC)
Inflammation is a process by which the bodys white blood cells and the substances they produce protect us from infection with foreign organisms, such as
bacteria and viruses.
Since many organs do not have many pain sensitive nerves, pain may not be a primary issue, but can still be a life-disrupting
symptom of an inflammatory disease.
Non-Prescription (Cx)
Medas portfolio of consumer healthcare Cx products, which can be prescribed or recommended by physicians and pharmacists, are backed by clinical data,
which strengthens their credibility and reputation with healthcare professionals.
Cx products tend to be less susceptible to the pricing pressures that
affect Rx-products as a result of reference pricing, financial pressure on national health systems and the increased competitiveness of generics.
Over-the-Counter Drugs (OTC)
The percentage of
OTC drugs is higher in emerging markets than in mature markets, often due to the fact that consumers in those markets have less access to advanced healthcare. In these circumstances, OTC drugs may replace prescription drugs. In more developed
markets, demand for OTC drugs is driven by a growing interest in self-healing, wellness and improved quality of life.
Manufacturing and Supply
Meda combines proprietary production with contract manufacturing of drugs. Medas proprietary production accounted for approximately 40 percent
of its sales volume as of December 31, 2015.
At December 31, 2015, Meda had the following proprietary production units:
|
|
|
Merignac (France) contains around 260 employeesProduces liquids and solutions, such as Betadine
®
|
|
|
|
Cologne (Germany) contains around 260 employeesProduces various preparation forms, such as Novolizer
®
|
|
|
|
Decatur (Illinois, USA) contains around 90 employeesProduces various preparation forms, such as Soma
®
,
Astepro
®
and Geritol
®
|
|
|
|
Dublin (Ireland) contains around 160 employeesProduces glucosamine sulphate (API), oral solid dosage and drops, such as the products Dona
®
, Zyma
®
and Plantaben
®
|
|
|
|
Troisdorf (Germany) contains around 240 employeesMultipurpose production of oral solid dosage, liquids, gels and granules, such as Legalon
®
, Reparil
®
and Agiolax
®
|
|
|
|
Confienza (Italy) contains around 80 employeesProduces various preparation forms, such as Soma
®
,
Astepro
®
and Geritol
®
|
86
Customers
Medas customer structure consists of several customer groups. With respect to prescription drugs, the most important target group is doctors, nurses and
other medical professionals at specialist clinics and general practice surgeries. As Meda increasingly chooses to focus on specialist drugs, its marketing increasingly targets specialists.
For Cx / OTC drugs, marketing focuses largely on end customers (i.e. patients). Pharmacies and other establishments that provide pharmaceuticals are important
sales channels for Cx / OTC drugs. Their staff, in particular, plays a key role as they often provide advice to customers.
Organization and Employees
Meda had, as of December 31, 2015, a diversified product portfolio and proprietary sales organization in close to 60 countries. Taking into
account the markets where sales are handled by distributors, Medas products were sold in more than 150 countries as of December 31, 2015. Meda is the parent company of a number of subsidiaries (the Meda Group), and its
headquarters are located in Solna, outside of Stockholm, Sweden. Medas employees are primarily organized into four divisions:
Most of Medas employees work in marketing and sales, which represented almost 60 percent
of all employees as of December 31, 2015. The total number of employees for the Meda Group, as of December 31, 2015, was 4,617, of which 461 were contractors. Medas operations and number of employees has grown quickly, primarily
through acquisitions.
Marketing and Sales
Medas marketing organization consisted of 2,690 people as of December 31, 2015, of which 67 percent work in the Western European market, 21 percent
in emerging markets and 12 percent in the U.S. market. In markets where Meda has no representation, the export organization International Trade Business is in charge of operations. Medas marketing centers provide central support functions in
key therapeutic categories and also maintain relationships with relevant international organizations.
Product Development
Meda had, as of December 31, 2015, 449 employees working with development, clinical trials and drug registration. As a specialty pharmaceutical company,
Meda has stated that it refrains from capital-intensive, early-stage pharmaceutical development. Instead, Meda focuses on development in the late clinical phase, for example registering new pharmaceutical forms or new indications for existing drugs.
By working actively to improve and further develop existing products and known substances, Meda is able to defend and enhance its market position in its existing therapeutic categories.
Manufacturing
The manufacturing division ensures a
steady product flow to Medas marketing companies. Finished products are delivered from Medas own manufacturing units as well as contract manufacturers. Meda has six proprietary production units in Ireland, France, Germany, Italy and the
U.S. For more information on manufacturing, see Manufacturing and Supply above.
87
History
Meda was founded in 1954. The groundwork was laid to establish Medas platform as a specialty pharmaceutical company in 2000-2002 when Meda set a strategy
to build its future on proprietary products. Customers needs would be met through cost-effective measures with medical quality as a guiding principle. This work focused largely on identifying potential acquisitions and opportunities for
in-licensing.
88
MEDA MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF MEDA
This discussion and analysis reflects Medas views and should be read in conjunction with
Medas audited consolidated financial statements and the related notes thereto included elsewhere in this prospectus. Medas audited consolidated financial statements included in this prospectus have been prepared in accordance with IFRS
as issued by the IASB.
This discussion and analysis contains
forward-looking
statements that reflect
Medas views and which involve risk, uncertainties and assumptions. See Forward-Looking Statements. Medas actual results could differ materially from those anticipated in the
forward-looking
statements as a result of many factors, including those discussed in the section of this prospectus entitled Risk Factors Related to Meda.
Overview
Meda is a leading international specialty
pharmaceutical company with a broad product portfolio and its own sales organizations in over 60 countries. Including those markets where sales are managed by distributors, Medas products are sold in more than 150 different countries.
Based on a broad product portfolio and strong cash flow, Medas business concept is to identify, secure access to, integrate and commercialize
pharmaceutical products in its key therapeutic categories, and products for self-treatment and preventive healthcare. One of Medas assets has historically been the ability to commercialize products through its global organization. Key
activities are primarily development of existing products, manufacturing and supply, and sales and marketing.
Medas growth strategy involves a
combination of organic growth and acquisitions, although acquisitions have been the main driver of Medas expansion to date. Meda has been built on several transformational acquisitions, and this is expected to remain an important pathway for
growth. The addition of new products will also remain key to Medas growth over time. Acquisitions drive growth in two ways: firstly, by adding acquired revenue; and secondly, by creating new organic growth opportunities which are realized
through market and patient adapted product development and expanded geographical footprint. The successful integration of Rottapharm during 2015, for example, opened possibilities for further organic growth based on an expanded position (pain and
inflammation) and sustained potential (respiratory and dermatology) in key therapeutic categories, clinically proven consumer healthcare (Cx) products and OTC products together with an increased presence in emerging markets.
Medas product portfolio is well diversified and spans several therapeutic areas and product areas. In 2015, prescription drugs (Rx) accounted for 62
percent of net sales, while non-prescription drugs accounted for 36 percent, consisting of both Cx and OTC products. Even though Meda is involved in several therapeutic categories, it has three key therapeutic categories: respiratory, dermatology,
and pain and inflammation.
Meda has stated that its prescription drug (Rx) products are meeting a growing need among patients and healthcare providers.
The need is driven by different factors. In the respiratory therapeutic category, there is a growing incidence of respiratory illnesses in the form of allergies and asthma, particularly in Western Europe and North America, but also in growth
markets. The dermatology therapeutic category includes diseases such as skin cancer, acne and dermatitis, all of which are common conditions where incidence is growing. This is partly due to environmental factors such as sun exposure. The pain and
inflammation therapeutic category is experiencing growth in several different indications, resulting in rising costs for the customers. Pain and inflammation is an area affecting an increasing number of people due to increases in life expectancy.
The most common indications are back pain, neck pain and knee osteoarthritis.
Non-prescription drugs have increased in importance for Meda following the
acquisition of Rottapharm. The non-prescription product category consists of Cx and OTC products, which are categorized based on how they
89
are marketed. Cx includes clinically effective and scientifically proven non-prescription drugs. Cx is an attractive area which combines the best of Rx and OTC, such as non-reimbursement, free
pricing, good margins and limited generic competition. In recent years, Meda has built an extensive portfolio of OTC products, and now offers an increasing range of OTC products in its markets. OTC products are key complements to prescribed drugs
because they are easily accessible, save patients time and reduce cost pressures on the healthcare system.
In 2016, Medas focus is expected
to be on further exploiting growth products, emerging markets franchises and other opportunities.
Key Developments
Challenges with Italian business
Meda has noted
that it faces numerous challenges in Italy, including: a declining Cx business; unfavorable pricing conditions; and high inventories built up over the years at the wholesale level. Meda sought to take measures in the course of 2015 to address issues
in its Italian business, including by reorganizing the sales force. The situation with wholesale stocks also improved during the year as inventories were drawn down. As a result, Meda significantly reduced receivables in Italy and improved cash
flow.
Dymista approved for treatment of SAR in children aged 6 to 11
On February 20, 2016, Meda announced that the FDA has approved Dymista
®
, a nasal spray that
combines azelastine hydrochloride and fluticasone propionate in a composition for treating symptoms of seasonal allergic rhinitis (SAR) in patients aged 6 to 11 in need of both components for treatment. Dymista
®
was previously only indicated for adults and children over the age of 12. The approved dosage for children aged 6 to 11 is one spray per nostril BID (the same dosage as for adolescents and adults
with SAR).
Reglan settlement
In conjunction
with the purchase of Alaven Pharmaceuticals in 2010, Meda Pharmaceuticals Inc. assumed responsibility for ongoing U.S. product liability cases involving the product Reglan (metoclopramide). There are slightly less than 3,300 relevant cases in which
the company is named as one of multiple defendants, with most of the cases in Philadelphia, San Francisco and New Brunswick. In general, the cases involve plaintiffs that took Reglan for long periods of time to control gastric stasis and
gastroesophageal reflux and developed the side effect tardive dyskinesia, which is characterized by repetitive, involuntary muscle movements, generally of the face and extremities. The Reglan labeling since 1986 has warned about this condition if
the product was taken for more than twelve weeks. The plaintiffs allege that the warning was not prominent enough. While Meda has stated that it believes that it has meritorious defenses to these claims, Meda has reported that in order to avoid the
expense and distraction of litigation, Meda entered into a confidential settlement agreement in 2015 which establishes a framework to resolve all of the claims. Meda recognized a provision of $25 million in the third quarter of 2015 and $2.5 million
was paid in the fourth quarter of 2015. The settlement is subject to sufficient participation by the plaintiffs as determined in Medas sole discretion.
Divestment of Euromed manufacturing unit
On
December 1, 2015, Meda signed an agreement with The Riverside Company to divest Euromed S.A., a business-to-business manufacturer of herbal extracts and natural active substances located in Spain. The transaction was closed December 29,
2015 and total consideration was EUR 82 million in upfront cash for the shares of Euromed. The unit generated sales of around EUR 40 million (inclusive of approximately EUR 12 million of intercompany sales) and an operating profit
margin of around 18 percent on an annual basis (and 15% percent exclusive of intercompany sales). The divestment resulted in a gain of SEK 22 million which has been recognized as other income in 2015.
90
Acquisition and successful integration of Rottapharm
On July 31, 2014, Meda announced an agreement to acquire the Italian specialty pharma company Rottapharm S.p.A. The acquisition was completed on
October 10, 2014. The acquisition of Rottapharm increased Medas earnings profile by contributing a strong brand portfolio within consumer healthcare and increasing the companys presence on Emerging Markets (as defined below) by
roughly 50 percent. The acquisition was initially expected by Meda to lead to annual cost synergies of approximately SEK 900 million.
Rottapharm S.p.A.,
headquartered in Monza, Italy, was founded by Professor Luigi Rovati in 1961 and grew into a leading consumer healthcare focused branded specialty pharma company. The companys products have received the professional endorsement of doctors and
pharmacists within the consumer healthcare segment. The company combines Rx-reimbursed medications with more traditional consumer healthcare products, characterized by high scientific credibility (clinically-proven consumer healthcare products or
Cx); these are high-margin products that are prescribed or recommended by doctors with nearly no generic competition. Rottapharm has a global footprint with a presence of its products in 90 countries worldwide.
The purchase price amounted to SEK 17,654 million and consisted of SEK 12,309 million in cash after deduction of net debt in Rottapharm,
30 million Meda shares at a value, at the time of concluding the transaction, corresponding to SEK 2,976 million, and an unconditional deferred payment of SEK 2,600 million (EUR 275 million) which is payable in January 2017 (unless
such payment is accelerated by Meda undertaking certain transformative transactions).
In 2014, Rottapharm contributed SEK 1,533 million to
Medas net sales and an operating result of SEK 409 million. The operating result is adjusted for amortizations of SEK 162 million related to adjustments of product rights to fair value and restructuring costs of SEK 485 million,
which are the part of the restructuring costs charged to Rottapharm.
Meda has reported that it successfully integrated Rottapharm during 2015, ahead of
plan and achieving more than the planned synergies for the year, while at the same time continuing to drive its day-to-day business forward in its respective markets. Apart from synergies and increased revenues, Meda has reported that the
acquisition has strengthened Meda in several areas. It now has a wider product range and a more balanced portfolio with the addition, in particular, of a strong range of Cx products and presence in Emerging Markets. Medas own distribution
network now spans over 60 countries.
Meda and Valeant terminated their joint ventures
Meda reached an agreement with Valeant to terminate the companies joint ventures in Canada, Mexico, and Australia during the second quarter 2014. Meda
has established subsidiaries in all three countries. The rights to the products Flupirtine
®
, Onsolis
®
, and Sublinox
®
reverted to Meda, while Valeant has continued to pursue operations in Canada including the products Palafer
®
, Contac
®
, and Manerix
®
. Sublinox
®
has been out-licensed to Valeant in Canada. The
agreement also gave Meda extended sales rights to the in-licensed products Acnatac
®
and Zyclara
®
, allowing Meda to sell the products in
Australia and South Africa. Meda has also ceased paying royalties to Valeant on sales of Acnatac
®
and Zyclara
®
. The divestment resulted
in a gain of SEK 42 million which has been recognized as other income in 2014.
Dymista approved in Europe
Dymista was approved in Europe in 2013 through the decentralized registration process. Dymista has been approved for the treatment of seasonal and perennial
allergic rhinitis. The national registration processes, including negotiations regarding pricing and reimbursement, as well as product launches also began in 2013, with Dymista now sold in several European markets.
91
Meda acquired Aerospan
Meda acquired the patented product Aerospan through the acquisition of Acton Pharmaceuticals Inc. in 2013. The acquisition was completed on October 21,
2013 and the purchase price was $135 million. The transaction included a milestone payment of $10 million and royalty-based milestones.
Reporting
Segments and Product Categories
Meda management has stated that it assesses operations from a geographic perspective. Meda currently is organized in
three geographic areas: Western Europe (comprising Western Europe, excluding the Baltics, Poland, Czech Republic, Slovakia and Hungary); the U.S. (which includes Canada); and Emerging Markets (comprising Eastern Europe, including the Baltics,
Poland, Czech Republic, Slovakia, Hungary, Turkey, the Middle East, Mexico and other non-European markets).
In addition, Meda reports certain information
by product category: Rx (prescription drugs and specialty products); and Cx/OTC (non-prescription drugs).
Non-IFRS Financial Measures
Meda management uses EBITDA, EBITDA margin (i.e., EBITDA as a percentage of net sales) and free cash flow, each a non-IFRS financial measure, in conjunction
with other IFRS and non-IFRS financial measures, to assess its operating results and for financial and operational decision-making purposes. EBITDA represents operating profit (which excludes tax and finance income and finance costs) before
amortization and depreciation. Meda has stated that it believes that EBITDA provides useful information about its core operating results and enhances the comparability of profit across segments. Free cash flow represents cash flow from operating
activities less cash flow from investing activities (excluding acquired product rights and acquired operations). Meda also has stated that it believes that free cash flow provides useful information to investors about the amount of cash generated by
its business that can be used for strategic transactions, including making strategic investments and acquisitions.
The table below sets forth a
reconciliation of EBITDA to operating profits (the most directly comparable IFRS measure) for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Operating profit
|
|
|
2,719
|
|
|
|
1,487
|
|
|
|
1,548
|
|
Depreciation and amortization
|
|
|
3,284
|
|
|
|
2,503
|
|
|
|
2,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
6,003
|
|
|
|
3,990
|
|
|
|
3,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA margin (%)
|
|
|
30.6
|
|
|
|
26.0
|
|
|
|
28.5
|
|
A reconciliation of free cash flow to cash flow from operating activities (the most directly comparable IFRS measure) is set
forth under Liquidity and Capital ResourcesCash FlowsFree Cash Flow.
In addition, the discussion of Medas reported
operating results and cash flows present certain adjusted measures that are regularly reviewed by Meda management but are not prepared in accordance with IFRS. These include the following:
|
|
|
constant exchange rate measures
: net sales and certain expense measures that are adjusted to exclude currency effects;
|
|
|
|
organic growth measures
: net sales measures that are adjusted for currency effects,
acquisitions, disposals, discontinued products, and revenues from the cooperation agreement with Valeant (which revenues have not been included in the past based on Medas view that they represent a royalty stream
|
92
|
over which Meda has no influence). Differences between year-over-year growth in net sales on an actual and organic basis in the periods under review have primarily been attributable to currency
effects and the impact of the acquisition of Rottapharm. Organic growth in net sales has been calculated, in 2014 versus 2013, by excluding the impact of the acquisition of Rottapharm on Medas 2014 results, and in 2015 versus 2014, by
including Rottapharms 2014 results prior to its acquisition in Medas 2014 results on a pro forma basis as if the acquisition of Rottapharm had been completed as at the beginning of 2014. Although this difference in approach impacts the
comparability of the organic growth figures presented in respect of the different year-over-year periods, Meda has stated that it believes that this represents the most useful representation of organic growth for the different year-over-year periods
in isolation; and
|
|
|
|
measures adjusted for items affecting comparability
: measures that are adjusted to exclude the effect of certain restructuring costs and other items that Meda has stated affect the year-over-year comparisons of
Medas financial results.
|
Meda has stated that, while not intended to be a substitute for or superior to reporting measures prepared
in accordance with IFRS, it believes the above adjusted measures are useful to investors in evaluating its results as they are indicative of its ongoing performance and reflect how management evaluates its operational results and trends.
In order to compute constant exchange rate growth, Meda translates financial data for a period into SEK using the same foreign currency exchange rates that it
used to translate financial data for the previous period.
Reconciliations of organic growth to reported growth are shown after their use in the
discussion below. Medas net sales for 2014 by geographic segment and by product category on a pro forma basis as if the acquisition of Rottapharm had been completed as at the beginning of 2014 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
SEK million
|
|
Sales (reported)
(1)
|
|
|
Pro forma adjustments
relating to acquisition
of
Rottapharm
(2)
|
|
|
Sales (pro forma)
|
|
Western Europe
|
|
|
10,205
|
|
|
|
2,253
|
|
|
|
12,458
|
|
U.S.
|
|
|
2,542
|
|
|
|
4
|
|
|
|
2,546
|
|
Emerging Markets
|
|
|
2,370
|
|
|
|
908
|
|
|
|
3,278
|
|
Other Sales
|
|
|
235
|
|
|
|
186
|
|
|
|
421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
15,352
|
|
|
|
3,351
|
|
|
|
18,703
|
|
|
|
|
|
Rx
|
|
|
10,536
|
|
|
|
792
|
|
|
|
11,328
|
|
Cx/OTC
|
|
|
4,581
|
|
|
|
2,373
|
|
|
|
6,954
|
|
Other Sales
|
|
|
235
|
|
|
|
186
|
|
|
|
421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
15,352
|
|
|
|
3,351
|
|
|
|
18,703
|
|
(1)
|
As of January 1, 2015, Meda reports all medical device products by geographic area and by product category. These products were previously not allocated in full by geographic area and were recognized as other sales
in the reporting by product category. The change has not resulted in any change in the reporting by geographic area for the full year 2014. Other Sales by product category for 2014 have been adjusted from SEK 492 million to SEK
235 million, with SEK 28 million allocated to Rx and SEK 229 million allocated to Cx/OTC.
|
(2)
|
Represents historical Rottapharm net sales for the portion of 2014 prior to its consolidation as of October 10, 2014, with reclassifications to align Rottapharms historical financial information with
Medas financial statement presentation.
|
Reconciliations of key income statement line items and EBITDA for 2015 and 2014 excluding and
including restructuring costs and other items affecting comparability are set forth below under Results of OperationsItems Affecting Comparability.
93
The additional information discussed in this section is not uniformly defined by all companies including those in
Medas industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, certain information presented is derived from amounts calculated in accordance with IFRS but is not itself
an expressly permitted IFRS measure. Such non-IFRS measures should not be viewed in isolation or as an alternative to the equivalent IFRS measure.
Results of Operations
The following table summarizes
Medas consolidated results of operations for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Net sales
|
|
|
19,648
|
|
|
|
15,352
|
|
|
|
13,114
|
|
Cost of sales
|
|
|
7,525
|
|
|
|
6,083
|
|
|
|
5,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
12,123
|
|
|
|
9,269
|
|
|
|
8,027
|
|
|
|
|
|
Other income
|
|
|
22
|
|
|
|
42
|
|
|
|
|
|
Selling expenses
|
|
|
4,359
|
|
|
|
3,718
|
|
|
|
2,993
|
|
Medicine and business development expenses
|
|
|
4,086
|
|
|
|
3,223
|
|
|
|
2,794
|
|
Administrative expenses
|
|
|
981
|
|
|
|
883
|
|
|
|
692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
2,719
|
|
|
|
1,487
|
|
|
|
1,548
|
|
|
|
|
|
Finance income
|
|
|
37
|
|
|
|
8
|
|
|
|
22
|
|
Finance costs
|
|
|
1,452
|
|
|
|
913
|
|
|
|
567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after financial items
|
|
|
1,304
|
|
|
|
582
|
|
|
|
1,003
|
|
|
|
|
|
Tax
|
|
|
112
|
|
|
|
180
|
|
|
|
198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,192
|
|
|
|
402
|
|
|
|
805
|
|
|
|
|
|
Earnings attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent company shareholders
|
|
|
1,176
|
|
|
|
399
|
|
|
|
807
|
|
Non-controlling interests
|
|
|
16
|
|
|
|
3
|
|
|
|
2
|
|
94
Items Affecting Comparability
The following table sets forth a reconciliation of key income statement line items and EBITDA for 2015 and 2014 excluding and including restructuring costs and
other items affecting comparability. No such items were applicable or incurred in 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
Excluding
restructuring costs
and other items
affecting
comparability
|
|
|
Restructuring
costs
|
|
|
Other items
affecting
comparability
|
|
|
Including
restructuring
costs and other
items affecting
comparability
|
|
Net sales
|
|
|
19,648
|
|
|
|
|
|
|
|
|
|
|
|
19,648
|
|
Cost of sales
|
|
|
7,533
|
|
|
|
8
|
|
|
|
|
|
|
|
7,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
12,115
|
|
|
|
8
|
|
|
|
|
|
|
|
12,123
|
|
|
|
|
|
|
Other income
|
|
|
|
|
|
|
|
|
|
|
22
|
|
|
|
22
|
|
Selling expenses
|
|
|
4,132
|
|
|
|
227
|
|
|
|
|
|
|
|
4,359
|
|
Medicine and business development expenses
|
|
|
3,851
|
|
|
|
25
|
|
|
|
210
|
|
|
|
4,086
|
|
Administrative expenses
|
|
|
934
|
|
|
|
47
|
|
|
|
|
|
|
|
981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
3,198
|
|
|
|
291
|
|
|
|
188
|
|
|
|
2,719
|
|
|
|
|
|
|
Net financial items
|
|
|
1,196
|
|
|
|
|
|
|
|
219
|
|
|
|
1,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after financial items
|
|
|
2,002
|
|
|
|
291
|
|
|
|
407
|
|
|
|
1,304
|
|
|
|
|
|
|
Tax
|
|
|
471
|
|
|
|
359
|
|
|
|
|
|
|
|
112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,531
|
|
|
|
68
|
|
|
|
407
|
|
|
|
1,192
|
|
EBITDA
|
|
|
6,482
|
|
|
|
291
|
|
|
|
188
|
|
|
|
6,003
|
|
Amortization, product rights
|
|
|
3,040
|
|
|
|
|
|
|
|
|
|
|
|
3,040
|
|
Depreciation and amortization, other
|
|
|
244
|
|
|
|
|
|
|
|
|
|
|
|
244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
3,198
|
|
|
|
291
|
|
|
|
188
|
|
|
|
2,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
Excluding
restructuring costs
and other items
affecting
comparability
|
|
|
Restructuring
costs
|
|
|
Other items
affecting
comparability
|
|
|
Including
restructuring
costs and other
items affecting
comparability
|
|
Net sales
|
|
|
15,352
|
|
|
|
|
|
|
|
|
|
|
|
15,352
|
|
Cost of sales
|
|
|
6,053
|
|
|
|
30
|
|
|
|
|
|
|
|
6,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
9,299
|
|
|
|
30
|
|
|
|
|
|
|
|
9,269
|
|
|
|
|
|
|
Other income
|
|
|
|
|
|
|
|
|
|
|
42
|
|
|
|
42
|
|
Selling expenses
|
|
|
3,342
|
|
|
|
376
|
|
|
|
|
|
|
|
3,718
|
|
Medicine and business development expenses
|
|
|
3,043
|
|
|
|
59
|
|
|
|
121
|
|
|
|
3,223
|
|
Administrative expenses
|
|
|
717
|
|
|
|
166
|
|
|
|
|
|
|
|
883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
2,197
|
|
|
|
631
|
|
|
|
79
|
|
|
|
1,487
|
|
|
|
|
|
|
Net financial items
|
|
|
665
|
|
|
|
|
|
|
|
240
|
|
|
|
905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after financial items
|
|
|
1,532
|
|
|
|
631
|
|
|
|
319
|
|
|
|
582
|
|
|
|
|
|
|
Tax
|
|
|
351
|
|
|
|
171
|
|
|
|
|
|
|
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,181
|
|
|
|
460
|
|
|
|
319
|
|
|
|
402
|
|
|
|
|
|
|
EBITDA
|
|
|
4,700
|
|
|
|
631
|
|
|
|
79
|
|
|
|
3,990
|
|
Amortization, product rights
|
|
|
2,348
|
|
|
|
|
|
|
|
|
|
|
|
2,348
|
|
Depreciation and amortization, other
|
|
|
155
|
|
|
|
|
|
|
|
|
|
|
|
155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
2,197
|
|
|
|
631
|
|
|
|
79
|
|
|
|
1,487
|
|
95
Year Ended December 31, 2015 Compared to Year Ended December 31, 2014
Sales
Net sales for 2015 amounted to SEK
19,648 million (2014: SEK 15,352 million), which corresponds to an increase of 28 percent as against 2014. At constant exchange rates, net sales increased by 21 percent, with the lower growth rate in constant exchange rate terms primarily
reflecting a significant appreciation of the U.S. dollar against the Swedish kroner, and moderate appreciation of the euro against the Swedish kroner. The Rottapharm acquisition contributed sales of SEK 4,937 million in 2015 (as against SEK
1,533 million in 2014). Organic growth in net sales amounted to -1 percent. Differences between growth in net sales on an actual and organic basis in 2015 as against 2014, including in respect of the geographic segments and product categories
discussed below, were primarily attributable to currency effects and the impact of the acquisition of Rottapharm. On an organic basis, strong sales in Emerging Markets and in the U.S. region were more than offset by lower sales in Western Europe,
mainly attributable to the challenges in Italy discussed above under Key Developments (although, due to Rottapharms significant presence in Italy, Italy favorably contributed to growth in actual and constant exchange rate
terms).
The following table sets forth Medas net sales by geographic segment for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
Year ended December 31
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Change
(actual)
|
|
|
Change
(constant
exchange
rates)
|
|
|
Change
(organic)
|
|
Western Europe
|
|
|
12,213
|
|
|
|
10,205
|
|
|
|
20
|
%
|
|
|
16
|
%
|
|
|
5
|
%
|
U.S.
|
|
|
3,354
|
|
|
|
2,542
|
|
|
|
32
|
%
|
|
|
10
|
%
|
|
|
11
|
%
|
Emerging Markets
|
|
|
3,660
|
|
|
|
2,370
|
|
|
|
54
|
%
|
|
|
47
|
%
|
|
|
7
|
%
|
Other Sales
|
|
|
421
|
|
|
|
235
|
|
|
|
79
|
%
|
|
|
75
|
%
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
19,648
|
|
|
|
15,352
|
|
|
|
28
|
%
|
|
|
21
|
%
|
|
|
1
|
%
|
Sales for Western Europe were SEK 12,213 million (2014: SEK 10,205 million), representing a 20 percent increase over 2014
and a 16 percent increase at constant exchange rates. Sales of products from Rottapharm amounted to SEK 3,013 million (as against SEK 1,119 million in 2014). Organic growth was 5 percent as against 2014. On an organic basis, sales
were negatively impacted above all by poor sales development in Italy, as well as in France, due to generic competition for Tambocor. Sales development on an organic basis was positive in the Nordic markets, Germany, Austria and Portugal.
U.S. sales amounted to SEK 3,354 million (2014: SEK 2,542 million), corresponding to an increase of 32 percent over 2014 and 10 percent at constant
exchange rates. Organic growth was 11 percent as against 2014. On an organic basis, sales were held back by the impact of generic competition on Astepro and sales of launch quantities in the first quarter of 2014 for Aerospan. These negative effects
were more than compensated for by higher sales in constant exchange rate terms of Felbatol in particular, as well as Astelin and some other products. Dymista sales of SEK 706 million were 3 percent higher than in the prior year in constant
exchange rate terms (actual: 27 percent higher).
Sales in Emerging Markets amounted to SEK 3,660 million (2014: SEK 2,370 million), representing a
54 percent increase. At constant exchange rates, the increase was 47 percent, while organic growth was 7 percent. Sales of products from Rottapharm amounted to SEK 1,612 million (as against SEK 349 million in 2014). On an organic basis,
sales were especially strong in Greater China, the Middle East, and Malaysia, while sales in the CIS region (comprised of Ukraine, Moldova, Belarus, Kazakhstan, Azerbaijan, Armenia, Georgia, Turkmenistan, Uzbekistan, Mongolia and the Kyrgyz
Republic) were hampered by the economic situation and Australia and Turkey also showed lower sales.
96
The following table sets forth Medas net sales by product category for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
Year ended December 31
|
|
|
|
|
|
|
|
|
Change
(organic)
|
|
|
2015
|
|
|
2014
(1)
|
|
|
Change
(actual)
|
|
|
Change
(constant
exchange
rates)
|
|
|
Rx
|
|
|
12,160
|
|
|
|
10,536
|
|
|
|
15
|
%
|
|
|
8
|
%
|
|
|
0
|
%
|
Cx/OTC
|
|
|
7,067
|
|
|
|
4,581
|
|
|
|
54
|
%
|
|
|
47
|
%
|
|
|
3
|
%
|
Other Sales
|
|
|
421
|
|
|
|
235
|
|
|
|
79
|
%
|
|
|
74
|
%
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
19,648
|
|
|
|
15,352
|
|
|
|
28
|
%
|
|
|
21
|
%
|
|
|
1
|
%
|
(1)
|
As of January 1, 2015, Meda reports all medical device products by geographic area and by product category. These products were previously not allocated in full by geographic area and were recognized as other sales
in the reporting by product category. The change has not resulted in any change in the reporting by geographic area for the full year 2014. Other Sales by product category for 2014 have been adjusted from SEK 492 million to SEK
235 million, with SEK 28 million allocated to Rx and SEK 229 million allocated to Cx/OTC.
|
Sales of prescription drugs (Rx)
amounted to SEK 12,160 million (2014: SEK 10,536 million), representing a 15 percent increase over 2014 and an 8 percent increase at constant exchange rates. Organic growth was flat. The impact on sales growth on an organic basis from
generic competitors to Astepro in the U.S. and Tambocor in France was negative. Several products in Medas prioritized therapeutic areas showed good growth on a constant exchange rate basis, including Dymista, which grew at 19 percent (actual:
39 percent) to SEK 1,003 million, and Elidel, which grew at 40 percent (actual: 51 percent) to SEK 518 million.
Cx/OTC sales amounted to SEK
7,067 million (2014: SEK 4,581 million), representing a 54 percent increase over 2014 and a 47 percent increase at constant exchange rates. The Rottapharm acquisition contributed sales of SEK 3,474 million (as against SEK
1,027 million in 2014). Organic growth amounted to 3 percent, mainly due to negative sales development in Italy. On an organic basis, sales of Dona and Armolipid, part of the product portfolio acquired from Rottapharm, grew at moderate
rates to SEK 855 million and SEK 334 million, respectively. On a constant exchange rate basis, Betadine sales were slightly below last year, while CB12 sales declined by 17 percent (actual: 15 percent) to SEK 290 million.
The table below sets forth a reconciliation of reported growth to organic growth for net sales by geographic segment and product category for 2015 versus
2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
(actual)
|
|
|
Currency
effects
|
|
|
Discontinued
products
|
|
|
Rottapharm
acquisition
|
|
|
Change
(organic)
|
|
Western Europe
|
|
|
20
|
%
|
|
|
4
|
%
|
|
|
|
|
|
|
21
|
%
|
|
|
5
|
%
|
U.S.
|
|
|
32
|
%
|
|
|
22
|
%
|
|
|
1
|
%
|
|
|
|
|
|
|
11
|
%
|
Emerging Markets
|
|
|
54
|
%
|
|
|
7
|
%
|
|
|
|
|
|
|
40
|
%
|
|
|
7
|
%
|
Other Sales
|
|
|
79
|
%
|
|
|
5
|
%
|
|
|
1
|
%
|
|
|
77
|
%
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
28
|
%
|
|
|
7
|
%
|
|
|
|
|
|
|
22
|
%
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
(actual)
|
|
|
Currency
effects
|
|
|
Discontinued
products
|
|
|
Rottapharm
acquisition
|
|
|
Change
(organic)
|
|
Rx
|
|
|
15
|
%
|
|
|
7
|
%
|
|
|
|
|
|
|
8
|
%
|
|
|
0
|
%
|
Cx/OTC
|
|
|
54
|
%
|
|
|
7
|
%
|
|
|
|
|
|
|
50
|
%
|
|
|
3
|
%
|
Other Sales
|
|
|
79
|
%
|
|
|
5
|
%
|
|
|
1
|
%
|
|
|
77
|
%
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
28
|
%
|
|
|
7
|
%
|
|
|
|
|
|
|
22
|
%
|
|
|
1
|
%
|
97
Operating Expenses, Operating Profit and EBITDA
Operating profit was SEK 2,719 million (2014: SEK 1,487 million) and EBITDA was SEK 6,003 million (2014: SEK 3,990 million) due to the development of
net sales discussed above and of operating expenses discussed below. This yielded a 13.8 percent operating profit margin and a 30.6 percent EBITDA margin (2014: 26.0 percent). Excluding restructuring costs and other items affecting comparability,
operating profit amounted to SEK 3,198 million (2014: SEK 2,197 million) and EBITDA to SEK 6,482 million (2014: SEK 4,700 million). This corresponds to a growth rate of operating profit (excluding restructuring costs and other items
affecting comparability) of 46 percent, or 28 percent at constant exchange rates, and operating profit margin (excluding restructuring costs and other items affecting comparability) of 16.3 percent (2014: 14.3 percent), and to a growth rate of
EBITDA (excluding restructuring costs and other items affecting comparability) of 38 percent, or 30 percent at constant exchange rates, and EBITDA margin (excluding restructuring costs and other items affecting comparability) of 33.0 percent (2014:
30.6 percent).
Operating expenses amounted to SEK 9,426 million (2014: SEK 7,824 million) and included restructuring costs of SEK 299 million
and a provision of SEK 210 million related to the ongoing U.S. product liability cases involving the product Reglan. Operating expenses excluding restructuring costs and other items affecting comparability were SEK 8,917 million (2014: SEK
7,102 million), with the increase over 2014 primarily reflecting the inclusion of Rottapharm in Medas results for the full year.
Selling expenses,
including restructuring costs of SEK 227 million, were SEK 4,359 million (2014: SEK 3,718 million, including restructuring costs of SEK 376 million). Selling expenses excluding restructuring costs increased by 15 percent compared with
the previous year at constant exchange rates, with the increase over 2014 primarily reflecting the inclusion of Rottapharm in Medas results for the full year.
Medicine and business development expenses, including restructuring costs of SEK 25 million and the provision of SEK 210 million mentioned above,
were SEK 4,086 million (2014: SEK 3,223 million, including restructuring costs and other items affecting comparability of SEK 180 million). The increase in medicine and business development expenses excluding restructuring costs and other
items affecting comparability primarily reflected the inclusion of Rottapharm in Medas results for the full year.
Administrative expenses,
including restructuring costs of SEK 47 million, totaled SEK 981 million (2014: SEK 883 million, including restructuring costs of SEK 166 million). The increase in administrative expenses excluding restructuring costs primarily
reflected the inclusion of Rottapharm in Medas results for the full year.
Net Financial Items, Tax and Net Profit
Net financial items amounted to SEK 1,415 million (2014: SEK 905 million) and include expenses of SEK 219 million categorized as an item
affecting comparability related to the redemption of a bond loan in late April 2015 which was absorbed in conjunction with the acquisition of Rottapharm. Excluding items affecting comparability (see Results of OperationsItems
Affecting Comparability), net financial items totaled SEK 1,196 million (2014: SEK 665 million), with the increase over 2014 primarily attributable to increased interest expense due to increased borrowings and higher interest
rates.
Profit/loss after net financial items totaled SEK 1,304 million (2014: SEK 582 million). Reported tax amounted to SEK 112 million
(2014: SEK 180 million). Reported tax was reduced by SEK 359 million as a result of tax effects attributable to restructuring costs and the utilization of a non-capitalized loss carry-forward in the German operations. Excluding tax
effects attributable to restructuring costs, the tax expense was SEK 471 million (2014: SEK 351 million), equivalent to a tax rate of 23.5 percent (2014: 22.9 percent), with the increased tax rate primarily attributable to the inclusion of
Rottapharm in Medas results for the full year.
Net profit totaled SEK 1,192 million (2014: SEK 402 million) for the reasons described above.
98
Year Ended December 31, 2014 Compared to Year Ended December 31, 2013
Sales
Net sales for 2014 amounted to SEK
15,352 million (2013: SEK 13,114 million), which corresponds to an increase of 17 percent as against 2013. At constant exchange rates, sales increased 12 percent, with the lower growth rate in constant exchange rate terms primarily reflecting
moderate appreciation of the U.S. dollar and the euro against the Swedish kroner. The Rottapharm acquisition contributed sales of SEK 1,533 million in 2014. Organic growth for the full-year amounted to 2 percent. Differences between growth in
net sales on an actual and organic basis in 2014 as against 2013, including in respect of the geographic segments and product categories discussed below, were primarily attributable to currency effects and the impact of the acquisition of
Rottapharm.
The following table sets forth Medas net sales by geographic segment for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
Year ended December 31
|
|
|
|
|
|
|
|
|
Change
(organic
growth)
|
|
|
2014
(1)
|
|
|
2013
(1)
|
|
|
Change
(actual
exchange
rate)
|
|
|
Change
(constant
exchange
rate)
|
|
|
Western Europe
|
|
|
10,205
|
|
|
|
8,507
|
|
|
|
20
|
%
|
|
|
14
|
%
|
|
|
2
|
%
|
U.S.
|
|
|
2,542
|
|
|
|
2,454
|
|
|
|
5
|
%
|
|
|
0
|
%
|
|
|
1
|
%
|
Emerging Markets
|
|
|
2,370
|
|
|
|
1,951
|
|
|
|
21
|
%
|
|
|
22
|
%
|
|
|
5
|
%
|
Other Sales
|
|
|
235
|
|
|
|
202
|
|
|
|
16
|
%
|
|
|
8
|
%
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
15,352
|
|
|
|
13,114
|
|
|
|
17
|
%
|
|
|
12
|
%
|
|
|
2
|
%
|
(1)
|
As of January 1, 2015, Meda reports all medical device products by geographic area and by product category. These products were previously not allocated in full by geographic area and were recognized as other sales
in the reporting by product category. The change has not resulted in any change in the reporting by geographic area for the full year 2014. Other Sales by product category for 2014 have been adjusted from SEK 492 million to SEK
235 million, with SEK 28 million allocated to Rx and SEK 229 million allocated to Cx/OTC. Other sales by geographic area for 2013 have been adjusted from SEK 240 million to SEK 202 million, with SEK 38 million allocated
to U.S. Other Sales by product category for 2013 have been adjusted from SEK 396 million to SEK 202 million, with SEK 15 million allocated to Rx and SEK 179 million allocated to Cx/OTC.
|
Sales for Western Europe were SEK 10,205 million (2013: SEK 8,507 million), representing a 20 percent increase over 2013 and 14 percent at constant
exchange rates. Sales of products from Rottapharm amounted to SEK 1,119 million. Organic growth amounted to 2 percent as against 2013. On an organic basis, growth was primarily fueled by Spain and Sweden, but most other markets also displayed
healthy growth. Sales on the German market saw a decline on an organic basis compared with the previous year, primarily owing to lower sales of Formatris in constant exchange rate terms. Sales in France also dropped on an organic basis due to
increased generic competition for Tambocor during the second half of the year.
U.S. sales amounted to SEK 2,542 million (2013: SEK 2,454 million),
representing a 5 percent increase. At constant exchange rates, sales were flat, while organic growth was 1 percent. Sales of Dymista rose to SEK 556 million (2013: SEK 410 million). Sales of launch quantities of Aerospan totaled SEK 37 million.
The negative organic growth is primarily attributable to lower sales of Astepro in constant exchange rate terms owing to generic competition.
Sales in
Emerging Markets amounted to SEK 2,370 million (2013: SEK 1,951 million), representing a 21 percent increase as against 2013. At constant exchange rates, the increase was 22 percent. The Rottapharm acquisition contributed sales of SEK
349 million in 2014. Organic growth amounted to 5 percent and was driven mainly by Russia, Australia, Turkey, and Mexico. Organic growth was impeded by delivery problems for Elidel, which resulted in lower sales in the Middle East and China
compared to the previous year.
99
The following table sets forth Medas net sales by product category for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
Year ended December 31
|
|
|
|
|
|
|
|
|
Change
(organic
growth)
|
|
|
2014
(1)
|
|
|
2013
(1)
|
|
|
Change
(actual
exchange
rate)
|
|
|
Change
(constant
exchange
rate)
|
|
|
Rx
|
|
|
10,536
|
|
|
|
9,599
|
|
|
|
10
|
%
|
|
|
6
|
%
|
|
|
2
|
%
|
Cx/OTC
|
|
|
4,581
|
|
|
|
3,313
|
|
|
|
38
|
%
|
|
|
32
|
%
|
|
|
3
|
%
|
Other Sales
|
|
|
235
|
|
|
|
202
|
|
|
|
16
|
%
|
|
|
8
|
%
|
|
|
-19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
15,352
|
|
|
|
13,114
|
|
|
|
17
|
%
|
|
|
12
|
%
|
|
|
2
|
%
|
(1)
|
As of January 1, 2015, Meda reports all medical device products by geographic area and by product category. These products were previously not allocated in full
by geographic area and were recognized as other sales in the reporting by product category. The change has not resulted in any change in the reporting by geographic area for the full year 2014. Other Sales by product category for 2014 have been
adjusted from SEK 492 million to SEK 235 million, with SEK 28 million allocated to Rx and SEK 229 million allocated to Cx/OTC. Other sales by geographic area for 2013 have been adjusted from SEK 240 million to SEK
202 million, with SEK 38 million allocated to U.S. Other Sales by product category for 2013 have been adjusted from SEK 396 million to SEK 202 million, with SEK 15 million allocated to Rx and SEK 179 million allocated
to Cx/OTC.
|
Sales of prescription drugs (Rx) amounted to SEK 10,536 million (2013: SEK 9,599 million), representing an increase of 10
percent as against 2013 and 6 percent at constant exchange rates. The Rottapharm acquisition contributed sales of SEK 394 million in 2014. Organic growth amounted to 2 percent. Dymista made a significant contribution to the organic growth in
the period as a result of strong sales growth in constant exchange rate terms, while the trends for Astepro and Elidel in constant exchange rate terms were weak owing to generic competition and delivery problems. Tambocor also saw weak sales in
constant exchange rate terms due to increased generic competition.
Cx/OTC sales amounted to SEK 4,581 million (2013: SEK 3,313 million),
representing an increase of 38 percent, 32 percent at constant exchange rates and 3 percent in organic terms. The Rottapharm acquisition contributed sales of SEK 1,027 million, mainly via Dona, Legalon, Saugella, and Armolipid.
The table below sets forth a reconciliation of reported growth to organic growth for net sales by geographic segment and product category for 2014 versus
2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
(actual)
|
|
|
Currency
effects
|
|
|
Cooperation
agreement
with Valeant
|
|
|
Discontinued
products
|
|
|
Rottapharm
acquisition
|
|
|
Change
(organic)
|
|
Western Europe
|
|
|
20
|
%
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
12
|
%
|
|
|
2
|
%
|
U.S.
|
|
|
5
|
%
|
|
|
5
|
%
|
|
|
1
|
%
|
|
|
2
|
%
|
|
|
|
|
|
|
1
|
%
|
Emerging Markets
|
|
|
21
|
%
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
17
|
%
|
|
|
5
|
%
|
Other Sales
|
|
|
16
|
%
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
27
|
%
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
17
|
%
|
|
|
5
|
%
|
|
|
|
|
|
|
1
|
%
|
|
|
11
|
%
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
(actual)
|
|
|
Currency
effects
|
|
|
Cooperation
agreement
with Valeant
|
|
|
Discontinued
products
|
|
|
Rottapharm
acquisition
|
|
|
Change
(organic)
|
|
Rx
|
|
|
10
|
%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
4
|
%
|
|
|
2
|
%
|
Cx/OTC
|
|
|
38
|
%
|
|
|
6
|
%
|
|
|
|
|
|
|
1
|
%
|
|
|
30
|
%
|
|
|
3
|
%
|
Other Sales
|
|
|
16
|
%
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
27
|
%
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
17
|
%
|
|
|
5
|
%
|
|
|
|
|
|
|
1
|
%
|
|
|
11
|
%
|
|
|
2
|
%
|
100
Operating Expenses, Operating Profit and EBITDA
Operating profit for 2014 was SEK 1,487 million (2013: SEK 1,548 million) and EBITDA was SEK 3,990 million (2013: SEK 3,734 million) due to the
development of net sales discussed above and of operating expenses discussed below. This yielded a 26.0 percent (2013: 28.5 percent) EBITDA margin. Excluding restructuring costs and other items impacting comparability, operating profit amounted to
SEK 2,197 million (2013: 1,548 million) and EBITDA to SEK 4,700 million (2013: 3,734 million), corresponding to an operating profit (excluding restructuring costs and other items affecting comparability) margin of 16.3 percent (2013: 11.8
percent) and an EBITDA (excluding restructuring costs and other items affecting comparability) margin of 30.6 percent (2013: 28.5 percent).
Operating
expenses for the period amounted to SEK 7,824 million (2013: SEK 6,479 million). The increase is entirely due to an increase in total costs resulting from the acquisition of Rottapharm, coupled with restructuring costs of SEK 631 million
and transaction costs of SEK 121 million categorized as an item affecting comparability associated with the acquisition of Rottapharm.
Selling
expenses for the period amounted to SEK 3,718 million (2013: SEK 2,993 million). Selling expenses, excluding restructuring costs and other additional costs from Rottapharm, were consistent with the previous year at constant exchange rates.
Restructuring costs amounted to SEK 376 million.
Medicine and business development expenses amounted to SEK 3,223 million (2013: SEK 2,794 million)
and include the transaction costs of SEK 121 million associated with the acquisition of Rottapharm referred to above, along with restructuring costs of SEK 59 million. The increase in medicine and business development expenses excluding the
aforementioned restructuring costs and other items affecting comparability primarily reflected the inclusion of Rottapharm in Medas 2014 results for the portion of the year following its acquisition.
Administrative expenses for the period totaled SEK 883 million (2013: SEK 692 million). Excluding restructuring costs and other additional costs from
Rottapharm, administrative expenses decreased at constant exchange rates, primarily as a result of lower legal expenses. Restructuring costs amounted to SEK 166 million.
Net Financial Items, Tax and Net Profit
Meda net finance
expense amounted to SEK 905 million (2013: SEK 545 million) and profit after net financial items amounted to SEK 582 million (2013: SEK 1,003 million). The net finance expense in 2014 includes items affecting comparability of SEK
160 million relating to borrowing costs, transaction tax of SEK 36 million on the acquisition of the shares in Rottapharm, recognition of capitalized borrowing costs regarding Medas former bank facilities of SEK 32 million, and
financial expenses of SEK 12 million relating to Rottapharm. Excluding the aforementioned items affecting comparability of SEK 240 million, net finance expense totaled SEK 665 million in 2014 (2013: 545 million), with the
increase over 2013 primarily resulting from increased interest expense, increased finance lease expense and transaction tax relating to the acquisition of Rottapharm shares.
Tax expense was SEK 180 million (2013: SEK 198 million), equivalent to a tax rate of 30.9 percent (2013: 19.8 percent). Excluding tax effects
attributable to restructuring costs, the tax rate in 2014 was 22.9 percent (see
Note 13 to Medas audited consolidated financial statements), with
the increased tax rate primarily attributable to improved earnings growth in the United States. Tax effects attributable to restructuring costs reduced reported tax by SEK 171 million whereof SEK 229 million is linked to restructuring
costs and financial costs, SEK 21 million is linked to internal restructuring of subsidiaries ahead of the acquisition of Rottapharm and SEK 37 million is related to write-downs of deferred tax and additional tax related to prior years.
Net profit amounted to SEK 402 million (2013: SEK 805 million) for the reasons described above. Excluding restructuring costs and other items
affecting comparability, net profit for 2014 amounted to SEK 1,181 million (2013: SEK 805 million).
101
Liquidity and Capital Resources
Medas primary cash requirements have historically consisted of cash used in operating activities, including its working capital requirements, servicing
indebtedness and financing investments in future growth, such as the companys own product and marketing investments, as well as acquisitions. Medas primary sources of liquidity have historically consisted of cash flows from operating
activities, debt financing and, in limited instances, equity issuances.
Meda has stated that it anticipates that it will have adequate sources of working
capital in the next 12 months.
Cash Flows
The following table presents information regarding Medas cash flows for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Cash flow from operating activities before changes in working capital
|
|
|
3,717
|
|
|
|
3,254
|
|
|
|
2,956
|
|
Changes in working capital
|
|
|
393
|
|
|
|
212
|
|
|
|
111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities
|
|
|
3,324
|
|
|
|
3,042
|
|
|
|
2,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
262
|
|
|
|
8,906
|
|
|
|
1,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
4,272
|
|
|
|
7,914
|
|
|
|
1,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow for the period
|
|
|
686
|
|
|
|
2,050
|
|
|
|
7
|
|
|
|
|
|
Cash and cash equivalents at period start
|
|
|
2,311
|
|
|
|
178
|
|
|
|
194
|
|
Exchange-rate difference for cash and cash equivalents
|
|
|
13
|
|
|
|
83
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at period-end
|
|
|
1,612
|
|
|
|
2,311
|
|
|
|
178
|
|
Cash Flow from Operating Activities
Cash flow from operating activities before changes in working capital amounted to SEK 3,717 million in 2015. Working capital had an impact of SEK
393 million on cash flow. Cash flow from inventories totaled SEK 198 million, mainly relating to bridging stocks of raw material for Elidel, following the transfer to in-house manufacturing and lower sales than expected in the fourth
quarter of 2015. Receivables had a negative effect of SEK 96 million on cash flow. Liabilities had a negative effect of SEK 99 million on cash flow due to fluctuations in payments of trade payables offset by a reduction of accrued expenses
in the U.S. market and the payment of acquisition-related transaction costs. Accordingly, cash flow from operating activities amounted to SEK 3,324 million in 2015.
Cash flow from operating activities before changes in working capital amounted to SEK 3,254 in 2014. Working capital had a SEK 212 million impact on
cash flow. Cash flow from inventories totaled SEK 182 million, which is primarily due to lower wholesale inventory levels in southern Europe and the U.S. Receivables had an adverse effect on cash flow of SEK 536 million driven mainly by
increased trade receivables, which is mainly due to strong sales in the fourth quarter of 2014. Debts had a positive effect on cash flow of SEK 142 million. Accordingly, cash flow from operating activities amounted to SEK 3,042 million in 2014.
Cash flow from operating activities before changes in working capital amounted to SEK 2,956 million in 2013. Working capital affected cash flow in
the amount of SEK 111 million. Inventories increased by SEK 97 million, mainly due to stockpiling of Dymista in the U.S. market. Receivables had a negative impact on cash flow of SEK 225 million, mainly as a result of strong sales at
the end of the fourth quarter of 2013. Liabilities had a positive impact on cash flow in the amount of SEK 211 million, mainly explained by an increase in accrued expenses. Accordingly, cash flow from operating activities amounted to SEK
2,845 million in 2013.
102
Cash Flow from Investing Activities
Cash flow from investing activities amounted to SEK 262 million in 2015, and includes a cash effect of SEK 701 million related to the divestment of
the Euromed manufacturing unit in Spain.
Cash flow from investing activities amounted to SEK 8,906 million in 2014. The fourth quarter of 2014 saw
the completion of the Rottapharm acquisition, which had a SEK 8,744 million impact on investing activities.
Cash flow from investing activities
amounted to SEK 1,255 million in 2013. The acquisition of the patented product Aerospan in the U.S. was completed at the beginning of the fourth quarter of 2013.
Cash Flow from Financing Activities
Cash flow from
financing activities amounted to SEK 4,272 million in 2015, primarily as a result of debt repayments and deleveraging efforts. Dividends of SEK 914 million were paid in the second quarter of 2015.
Cash flow from financing activities amounted to SEK 7,914 million in 2014, due primarily to substantial borrowings incurred in connection with the
acquisition of Rottapharm. Dividends of SEK 756 million were paid during the second quarter of 2014.
Cash flow from financing activities amounted to
SEK 1,597 million in 2013.
Free Cash Flow
The
table below sets forth a reconciliation of free cash flow to cash flow from operating activities (the most directly comparable IFRS measure) for the periods indicated, and a further reconciliation of free cash flow excluding restructuring costs and
other items affecting comparability to free cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Cash flow from operating activities
|
|
|
3,324
|
|
|
|
3,042
|
|
|
|
2,845
|
|
Cash flow from investing activities
|
|
|
262
|
|
|
|
8,906
|
|
|
|
1,255
|
|
Excluding investments in product rights & acquired/divested operations
|
|
|
491
|
|
|
|
8,820
|
|
|
|
1,101
|
|
Excluding sale of non-current assets
|
|
|
0
|
|
|
|
55
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow (reported)
|
|
|
3,095
|
|
|
|
2,901
|
|
|
|
2,688
|
|
Restructuring payments
|
|
|
632
|
|
|
|
21
|
|
|
|
|
|
Financial payments categorized as items affecting comparability
|
|
|
289
|
|
|
|
32
|
|
|
|
|
|
Transaction cost payments
|
|
|
113
|
|
|
|
46
|
|
|
|
|
|
Reglan settlement payment
|
|
|
21
|
|
|
|
|
|
|
|
|
|
Tax payments categorized as items affecting comparability
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow (excluding restructuring costs and other items affecting
comparability)
|
|
|
4,172
|
|
|
|
3,000
|
|
|
|
2,688
|
|
Free cash flow was SEK 3,095 million in 2015. Restructuring costs of SEK 632 million, acquisition-related
transaction costs of SEK 113 million, costs related to the early redemption of the bond loan in Rottapharm of SEK 289 million, a tax payment of SEK 22 million linked to internal restructuring of subsidiaries and settlement costs of
SEK 21 million related to Reglan were paid during the period. Accordingly, free cash flow excluding restructuring costs and other items affecting comparability totaled SEK 4,172 million, corresponding to a 39 percent increase as against
2014.
Free cash flow was SEK 2,901 million in 2014. Free cash flow excluding restructuring costs and other items affecting comparability of SEK
99 million totaled SEK 3,000 million, corresponding to a 12 percent increase.
103
Free cash flow was SEK 2,688 million in 2013. There were no restructuring costs or other items affecting
comparability increasing or decreasing free cash flow in the year ended December 31, 2013.
Borrowings
On December 31, 2015, Meda had EUR, USD and SEK borrowings of SEK 24,862 million. The average interest rate including credit margins on December 31,
2015 was 2.5 percent (2014: 3.6 percent). Further information on Medas current borrowings, including their maturity profile, can be found in Notes 2 and 25 to Medas audited consolidated financial statements beginning on page F-1 of this
prospectus.
The basis of Medas debt financing is syndicated bank loans of SEK 25 billion with nine Swedish and foreign banks. This financing is
augmented with borrowing via a Swedish medium term note program with an upper limit of SEK 7 billion, a Swedish commercial paper program with an upper limit of SEK 4 billion, and a Bilateral bank loan of SEK 2 billion.
Confirmed credit facilities were as follows on December 31, 2015:
|
|
|
Bond loan of SEK 400 million, maturing in April 2016
|
|
|
|
Bilateral bank loan of SEK 2,000 million, maturing in 2017
|
|
|
|
Bond loan of SEK 600 million, maturing in April 2018
|
|
|
|
Bond loan of SEK 750 million, maturing in April 2019
|
|
|
|
Credit facility with nine banks amounting to SEK 25,000 million, maturing 20162020.
|
|
|
|
Term loan of SEK 6,063 million, maturing in December 2018.
|
|
|
|
Revolving loan of SEK 12,500 million, maturing in December 2019.
|
|
|
|
Term loan of SEK 6,151 million maturing in December 2020 (amortization of SEK 2,578 million).
|
The
syndicated credit facilities are available provided that Meda meets certain financial key ratios concerning net debt in relation to EBITDA and interest coverage ratio. Meda has met its financial key ratios for 2015.
As of December 31, 2015, Meda had unused confirmed credit facilities of SEK 5,227.
Off-Balance Sheet Arrangements
As of March 31, 2016
and December 31, 2015, Meda did not have any off balance-sheet arrangements that had a material current effect or that are reasonably likely to have a material future effect on its financial condition, changes in financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures or capital resources.
Contractual Obligations
The following table summarizes Medas contractual obligations as of December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment Due by Period
|
|
SEK million
|
|
Less than
1 year
|
|
|
12 years
|
|
|
23 years
|
|
|
34 years
|
|
|
45 years
|
|
|
More than
5 years
|
|
Borrowings
|
|
|
2,891
|
|
|
|
3,130
|
|
|
|
7,540
|
|
|
|
9,769
|
|
|
|
3,746
|
|
|
|
|
|
Unconditional deferred payment
|
|
|
|
|
|
|
2,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
(1)
|
|
|
40
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
1,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
215
|
|
|
|
164
|
|
|
|
159
|
|
|
|
92
|
|
|
|
52
|
|
|
|
58
|
|
Other liabilities
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104
(1)
|
Represents net settled derivatives. For derivatives with a variable interest rate, the variable rate that applied to each derivative on December 31, 2015 was used for the entire period to maturity. Financial
derivatives which will be settled gross comprised various currency forward contracts on the reporting date (see also Note 22 to Medas audited consolidated financial statements; on December 31, 2015, the contractually agreed undiscounted
cash flows from these instruments, maturing within 12 months, stood at SEK 23,835 million and SEK 23,895 million respectively.
|
Research and Development
Meda has stated that the
value-generating work performed in Medas development department is focused on tailored clinical development programs and the compilation of scientific arguments defending, exploring and highlighting product features. As a specialty pharma
company, Meda has stated that it refrains from high-risk, capital-intensive early research. Instead the companys resources are concentrated on development of close to market in the late clinical or registration phases. The focus is
often on well-known active ingredients and improving the characteristics of existing products, for example through:
|
|
|
New improved formulations, such as a pen in addition to the cotton swab for the medical device product EndWarts, which contains formic acid for the treatment of warts.
|
|
|
|
Development of combination products, such as Dymista (azelastine and fluticasone propionate) for allergic rhinitis.
|
|
|
|
Internationalization and regulatory approval of approved drugs, such as Novolizer, Acnatac, Zyclara and Dymista, in new countries/regions.
|
In the years ended December 31, 2015, 2014 and 2013, Meda invested SEK 207 million, SEK 235 million and SEK 249 million, respectively, in
drug maintenance and development, excluding costs for registration, side effect management and quality assurance.
Critical Accounting Estimates and
Judgments
Preparation of the financial statements in accordance with IFRS requires Meda management to make assessments, estimates and assumptions
which affect the reported assets and liabilities and other information disclosed in the closing accounts as well as the income and expenses reported during the period. Medas description of the most important accounting policies applied by Meda
based on assessments and the most important sources of uncertainty in estimates that may have an impact on Medas reported results and position in future financial years is set out in Note 3 to Medas audited consolidated financial
statements.
Quantitative and Qualitative Disclosures about Market Risk
Meda is exposed to various financial risks through its operations. Medas management of these risks is centralized to Medas internal bank and is
regulated in Medas financial policy. Medas objective is to identify, quantify, and keep risks of adverse impact on Medas income statements, balance sheets, and cash flows at suitable levels.
Currency risk
Transaction exposure is the risk of
impact on Medas net income and cash flow due to change in the value of commercial flows in foreign currencies in conjunction with exchange rate fluctuations. Meda has sales through its own sales organizations in more than 60 countries. Sales
to other countries occur as exports in both the customers local currency and other currencies such as EUR and USD. Purchases are mainly made in EUR, SEK, and USD. So in all, Meda is continually exposed to transaction risk; Meda has stated that
it believes that this exposure is however limited to a few units and the exposure that rises in trade receivables and trade payables
105
denominated in foreign currency is continuously hedged. On December 31, 2015, currency derivatives that hedged transaction exposure had a net fair value of SEK 36 million (2014: SEK 13
million). Hedge accounting is not applicable to these transactions, which means that changes to the fair value are carried to the income statement.
Most
of Medas operations are conducted in subsidiaries outside of Sweden in functional currencies other than SEK. Translation exposure arises for net investments in foreign operations. Translation exposure is for the most part in EUR, but also USD.
Meda hedges risk partially by taking external loans and contracting for currency swaps in the respective currency. Hedge accounting in accordance with IAS 39 is applied for these hedging transactions. Translation differences recognized in other
comprehensive income in 2015 that relate to net investments in foreign operations amounted to SEK -376 million (2014: SEK 2,118 million), and translation differences from hedging instruments for net investments amounted to SEK 308 million
(2014: SEK -1,014 million) after tax.
Meda sales are generated principally in currencies other than SEK. Changes in exchange rates therefore have a
significant effect on the consolidated income statement since consolidation in the foreign subsidiaries income statements is in SEK. This exposure is not hedged, because the subsidiaries mainly work in local currencies; exchange rate
fluctuations thus have no significant impact on competition or margins.
The next table shows the annual theoretical translation effect on Medas net
sales and earnings before tax. Calculated effects are based on recognized figures for 2015 excluding one-time effects. The average EUR/SEK exchange rate for 2015 was 9.35346 and 8.43026 for USD/SEK.
|
|
|
|
|
|
|
|
|
|
|
|
|
Parameter
|
|
Change,
%
|
|
|
Effect on net sales, SEK
million
|
|
|
Effect on profit after
tax, SEK million
|
|
On December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR/SEK
|
|
|
+/1
|
|
|
|
+/98
|
|
|
|
+/31
|
|
USD/SEK
|
|
|
+/1
|
|
|
|
+/36
|
|
|
|
+/4
|
|
Other currencies/SEK
|
|
|
+/1
|
|
|
|
+/49
|
|
|
|
+/1
|
|
|
|
|
|
On December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR/SEK
|
|
|
+/1
|
|
|
|
+/84
|
|
|
|
+/15
|
|
USD/SEK
|
|
|
+/1
|
|
|
|
+/24
|
|
|
|
+/1
|
|
Other currencies/SEK
|
|
|
+/1
|
|
|
|
+/31
|
|
|
|
+/1
|
|
Interest rate risk
Interest risk refers to the risk that changes in general interest rates may have an adverse effect on Medas net profit/loss. The time taken for interest
rate fluctuations to affect net profit/loss depends on the fixed interest period for the loan. Meda has stated that, per its policy, the loan portfolios fixed interest period, on average, should be between 3 and 15 months. On average, this
period was 5.5 months on December 31, 2015.
Meda uses interest rate swaps to extend/shorten the period of fixed interest on underlying loans. Meda
has stated that, per its policy, the duration of an interest rate swap may not exceed five years. Hedge accounting is applied to these transactions, and fair value is charged to other comprehensive income. In 2015, interest rate swaps had an impact
on other comprehensive income of SEK 1 million (2014: SEK 9 million) from cash flow hedging after tax. The fair value included in the consolidated balance sheet for interest rate swaps as of December 31, 2015 was a net amount of SEK
23 million (2014: SEK 22 million).
On December 31, 2015, group borrowings of SEK 24,862 million were mainly distributed as: EUR
1,614 million (SEK 14,834 million), $610 million (SEK 5,149 million), and SEK 4,879 million. The average interest rate including credit margins on December 31, 2015 was 2.5 percent (December 31, 2014: 3.6 percent). Interest expense for
2016 for this loan portfolio at unchanged interest rates would thus amount to approximately SEK 600
106
million. If interest rates change instantaneously +/ 1 percentage, Medas profit after tax would change by +/ SEK 168 million (135) on an annual basis, taking into
account the loan amounts and fixed interest rates that existed on December 31, 2015. Further information can be found in Note 25 to Medas audited consolidated financial statements beginning on page F-1 of this prospectus.
Refinancing risk
Refinancing risk is the risk
that the refinancing of a maturing loan is not feasible, and the risk that refinancing must be done during unfavorable market conditions at unfavorable interest rates. Meda seeks to limit refinancing risk by spreading the maturity structure of the
loan portfolio over time and spreading financing over several counterparties. See Liquidity and Capital ResourcesBorrowings for additional discussion on Medas existing borrowing arrangements.
Liquidity risk
Medas current liquidity is
covered by a retained liquidity reserve (cash and bank balances, current investments, and the unused portion of confirmed credit facilities) that in the long term is to amount to at least 5 percent of Medas annual sales. On December 31,
2015, the liquidity reserve stood at SEK 6,839 million, corresponding to 35 percent of sales for 2015. See Note 2 to Medas audited consolidated financial statements for additional detail on Medas contractually agreed undiscounted
cash flows.
Credit risk
Medas
financial transactions lead to credit risks in relation to financial counterparties. Meda has stated that, according to its financial policy, financial transactions may only be conducted with the groups financing banks, or banks with a high
official rating corresponding to Standard & Poors long-term A-rating or better. Investments in cash and cash equivalents can only be made in government securities or with banks that have a high official rating. Credit risk exists in
Medas cash and cash equivalents, derivatives, and cash balances with banks and financial institutions and in relation to distributors and wholesalers, including outstanding receivables and committed transactions.
Medas sales are mainly to large, established distributors and wholesalers with robust financial strength in each country. Since sales occur in several
countries and to many different customers, Meda has stated that it believes that it has good risk distribution. Meda follows up granted credits continually. Meda assets that entail credit risk are reported in Notes 21, 22 and 23 to Medas
audited consolidated financial statements.
Capital risk
Medas stated capital structure goal is to secure the companys ability to continue its operations with the aim of generating return to shareholders
and benefit for other stakeholders. The goal is also to keep the costs of capital down, through an optimal capital structure and by that strengthen Medas ability to meet its financial key ratios. Capital is judged on the basis of the
Medas equity/assets ratio. Medas stated long-term goal is an equity/total assets ratio of 30 percent. New shares may be issued to maintain the capital structure in conjunction with major acquisitions. As at December 31, 2015, Meda
has reported that the ratio of equity/total assets ratio stood at 34.4 percent (December 31, 2014: 31.8 percent).
107
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND
DIRECTORS OF MEDA
The following table sets forth certain information known to Mylan regarding the beneficial ownership of Medas shares as of
March 31, 2016 (based on 365,467,371 Meda shares outstanding as of such date) by:
|
|
|
Each person known by Mylan to be the beneficial owner of more than 5 percent of any class of Medas voting securities;
|
|
|
|
Each of Medas directors and executive officers; and
|
|
|
|
All of Medas directors and executive officers as a group.
|
For purposes of this table, and in accordance
with the rules of the SEC, shares are considered beneficially owned if the person, directly or indirectly, has sole or shared voting or investment power over such shares. A person is also considered to beneficially own shares that he or
she has the right to acquire within 60 days of March 31, 2016. Unless otherwise indicated, the principal address of each of the Meda shareholders listed below is c/o Meda AB, Pipers väg 2A, SE-170 73 Solna, Sweden. To Mylans
knowledge, the persons in the following table have sole voting and investment power, either directly or through one or more entities controlled by such person, with respect to all of the Meda shares shown as beneficially owned by them, unless
otherwise indicated in the footnotes below.
|
|
|
|
|
|
|
|
|
Name of Beneficial Owner
|
|
Amount and
Nature of
Beneficial
Ownership
|
|
|
Percent of Class
|
|
Five Percent Shareholders
|
|
Stena Sessan Rederi AB
(1)
|
|
|
75,652,948
|
|
|
|
20.7
|
|
Fidim S.r.l.
(2)
|
|
|
33,016,286
|
|
|
|
9.0
|
|
Directors and Executive Officers
|
|
Martin Svalstedt
(3)
|
|
|
40,016
|
|
|
|
*
|
|
Luca Rovati
|
|
|
|
|
|
|
|
|
Peter Claesson
(4)
|
|
|
5,500
|
|
|
|
*
|
|
Peter von Ehrenheim
(5)
|
|
|
16,500
|
|
|
|
*
|
|
Kimberly Lein-Mathisen
|
|
|
|
|
|
|
|
|
Lillie Li Valeur
|
|
|
|
|
|
|
|
|
Guido Oelkers
|
|
|
|
|
|
|
|
|
Lars Westerberg
(6)
|
|
|
44,000
|
|
|
|
*
|
|
Karen Sörensen
|
|
|
|
|
|
|
|
|
Dr. Jörg-Thomas Dierks
(7)
|
|
|
195,000
|
|
|
|
*
|
|
Esfandiar Faghfouri
(8)
|
|
|
3,500
|
|
|
|
*
|
|
Ton vant Hullenaar
(9)
|
|
|
3,500
|
|
|
|
*
|
|
Enzo Lacchini
|
|
|
|
|
|
|
|
|
Dr. Joachim Maus
(10)
|
|
|
3,000
|
|
|
|
*
|
|
Henrik Stenqvist
(11)
|
|
|
192,605
|
|
|
|
*
|
|
Hans-Jürgen Tritschler
(12)
|
|
|
1,000
|
|
|
|
*
|
|
Rainer Weiss
(13)
|
|
|
5,205
|
|
|
|
*
|
|
Mårten Österlund
(14)
|
|
|
105,644
|
|
|
|
*
|
|
Magnus Kjellberg
|
|
|
|
|
|
|
|
|
Paula Treutiger
|
|
|
|
|
|
|
|
|
All current directors and executive officers as a group (20 persons)
(15)
|
|
|
615,470
|
|
|
|
*
|
|
*
|
Denotes that beneficial ownership is less than one percent.
|
(1)
|
The address for Stena Sessan Rederi AB is P.O. Box 2181, SE-403 13 Göteborg, Sweden.
|
108
(2)
|
The address for Fidim S.r.l. is Galleria Dell Unione 5, Milano, 20122, Italy.
|
(3)
|
Includes 40,016 class A shares held by Mr. Svalstedt as of March 31, 2016 based on the insider register maintained by the SFSA (the SFSA Register).
|
(4)
|
Includes 5,500 class A shares held by Mr. Claesson as of March 31, 2016 based on the SFSA Register.
|
(5)
|
Includes 16,500 class A shares held by Mr. von Ehrenheim as of March 31, 2016 based on the SFSA Register.
|
(6)
|
Includes 44,000 class A shares held by Mr. Westerberg as of March 31, 2016 based on the SFSA Register.
|
(7)
|
Includes 195,000 class A shares held by Dr. Dierks as of March 31, 2016 based on the SFSA Register.
|
(8)
|
Includes 3,500 class A shares held by Mr. Faghfouri as of March 31, 2016 based on the SFSA Register.
|
(9)
|
Includes 3,500 class A shares held by Mr. Svalstedt as of March 31, 2016 based on the SFSA Register. In addition, Mr. Svalstedt holds 350 paid and subscribed shares as of March 31, 2016 based on the
SFSA Register.
|
(10)
|
Includes 3,000 class A shares held by Mr. Maus as of March 31, 2016 based on the SFSA Register.
|
(11)
|
Includes 192,605 class A shares held by Mr. Stenqvistt as of March 31, 2016 based on the SFSA Register.
|
(12)
|
Includes 1,000 class A shares held by Mr. Tritschler as of March 31, 2016 based on the SFSA Register.
|
(13)
|
Includes 5,205 class A shares held by Mr. Weiss as of March 31, 2016 based on the SFSA Register. In addition, Mr. Weiss holds 520 paid and subscribed shares and 5,200 subscription rights as of
March 31, 2016 based on the SFSA Register.
|
(14)
|
Includes 105,644 class A shares held by Mr. Österlund as of March 31, 2016 based on the SFSA Register. In addition, Mr. Österlund holds 2,356 paid and subscribed shares and 23,560 subscription
rights as of March 31, 2016 based on the SFSA Register.
|
(15)
|
Includes 615,470 class A shares beneficially owned by Medas officers and directors as of March 31, 2016 based on the SFSA Register. In addition Medas officers and directors hold 3,226 paid and
subscribed shares and 28,760 subscription rights as of March 31, 2016 based on the SFSA Register.
|
109
DESCRIPTION OF MYLAN SHARES
The following summary of the terms of the Mylan Shares does not purport to be complete and is subject to and qualified in its entirety by reference to
applicable Dutch law and our articles of association, which we refer to as our Articles or the Mylan Articles. A copy of our Articles has been filed with the SEC and is incorporated by reference as an exhibit to the Registration Statement of which
this prospectus is a part. See Where You Can Find More Information beginning on page 162 of this prospectus.
Share Capital
Authorized Share Capital
Our Articles authorize
two classes of shares, ordinary shares and preferred shares, each with a nominal value of 0.01 per share. Our authorized share capital is 24,000,000, nominal value, and is divided into 1,200,000,000 ordinary shares, each with a
nominal value of 0.01, and 1,200,000,000 preferred shares, each with a nominal value of 0.01.
Issued Share Capital
We have issued 491,299,336 ordinary shares with a nominal value of 0.01 per share as of March 31, 2016. All our ordinary shares are fully paid
up and non-assessable. On July 23, 2015, we issued 488,388,431 preferred shares to Stichting Preferred Shares Mylan. On September 19, 2015, Stichting Preferred Shares Mylan requested the redemption of the Mylan preferred shares issued on
July 23, 2015, informing Mylan that it was reasonably convinced that the influences that might adversely affect or threaten the strategy, mission, independence, continuity and/or identity of Mylan and its business in a manner that is contrary
to the interest of Mylan, its business and its stakeholders had been sufficiently addressed. Holders of Mylan Shares approved the redemption of the Mylan preferred shares on January 7, 2016 at an extraordinary general meeting of Mylan
shareholders. The redemption of the Mylan preferred shares became effective on March 17, 2016. There were no issued and outstanding Mylan preferred shares as of March 31, 2016. Stichting Preferred Shares Mylan will continue to have the
right to exercise its call option in the future in response to a new threat to the interests of Mylan, its businesses and its stakeholders from time to time.
Issuance of Shares
Until
February 27, 2020, the Mylan Board may decide to issue shares (including subscription rights thereto) up to our maximum authorized share capital. From and after February 27, 2020, our general meeting of our shareholders (General
Meeting) will have the power and authority upon a proposal duly made by the Mylan Board to so decide to issue shares up to our maximum authorized share capital at the time of such issuance, provided that the General Meeting may delegate to and
vest the Mylan Board with the power and authority to decide, from time to time, to issue shares up to such maximum amount (but in any event not to exceed our authorized share capital at the time of such issuance) and for such period (but in any
event not to exceed a period of five years) as the General Meeting may determine. Each such delegation by the General Meeting may be extended from time to time thereby, provided that no extension will result in such delegation exceeding five years,
the maximum period permitted by the applicable provision of Dutch law. Unless otherwise expressly provided therein, any such delegation by the General Meeting to the Mylan Board of the power and authority to decide to issue shares will be
irrevocable.
The consideration for which any shares will be issued (including any subscriptions rights related thereto), as decided on by the General
Meeting or the Mylan Board, as applicable, and the terms and conditions of such issuance of shares will be as set forth in the resolution of the General Meeting or the Mylan Board, as applicable, authorizing the issuance thereof.
110
Pre-emptive Rights
Our shareholders have a pre-emptive right with respect to the issuances of our ordinary shares in proportion to the aggregate amount of the ordinary shares
held by such shareholder. Our shareholders have no pre-emptive right with respect to the issuances of our preferred shares. Also no pre-emptive right exists upon the issue of shares (i) against payment other than in cash, (ii) to employees
of us or our group companies, or (iii) to a party exercising a previously acquired right to subscribe for shares.
Until February 27, 2020, the
Mylan Board may restrict or exclude any pre-emptive rights with respect to any share issuance (including subscription rights thereto) that the Mylan Board is authorized to resolve upon. From and after February 27, 2020, pre-emptive rights may
be restricted or excluded with respect to any share issuance (including subscriptions rights thereto) for shares pursuant to a resolution of the General Meeting upon a proposal duly made by the Mylan Board, or pursuant to a resolution of the Mylan
Board if the power and authority to restrict or exclude pre-emptive rights has been delegated to the Mylan Board by the General Meeting for such period (but in any event not to exceed five years) as the General Meeting may determine. Each such
delegation by the General Meeting may be extended from time to time thereby, provided that no extension will result in such delegation exceeding five years, the maximum period permitted by the applicable provision of Dutch law.
Unless otherwise expressly provided therein, any such delegation by the General Meeting will be irrevocable.
A resolution of the General Meeting to restrict or exclude pre-emptive rights or to delegate to the Mylan Board the power and authority to restrict or exclude
pre-emptive rights generally requires the approval of a majority of the votes cast at the General Meeting. If less than half of the issued share capital is represented at the meeting, the approval of at least two-thirds of the votes cast at the
General Meeting is required.
Composition of Our Board
As of the date of this prospectus, the Mylan Board had 13 members. Our Articles require that the Mylan Board has at least one executive director and two
non-executive directors. Our directors serve one-year terms and the entire Mylan Board is up for reelection at each annual General Meeting.
Election and Removal of Directors
Binding Nominations
Our directors are appointed by the General Meeting upon the binding nomination by the Mylan Board. The General Meeting may only overrule the binding nomination
by a resolution adopted by at least a two-thirds majority of the votes cast, provided such majority represents more than half of the issued share capital. If the General Meeting overrules a binding nomination for a director, the Mylan Board will
promptly make a new binding nomination to be submitted to a subsequent General Meeting. If the Board fails to exercise its right to submit a binding nomination for a director or fails to do so in a timely manner, the General Meeting may nominate and
appoint a director (with a majority of at least two-thirds of the votes cast representing more than half of Mylans issued share capital), provided that the relevant nominee(s) is/are named in the agenda of the meeting or the explanatory notes
thereto.
Removal
Directors may be suspended
or removed by the General Meeting, with or without cause, at any time. Our Articles provide that a resolution of the General Meeting to suspend or remove a director pursuant to and in accordance with a proposal by the Mylan Board will be passed with
an absolute majority of the votes cast. A resolution of the General Meeting to suspend or remove a director other than pursuant to and in accordance with a proposal by the Mylan Board will require a two-thirds majority of the votes cast,
representing more than half of the issued share capital.
111
Vacancies
Our Articles provide that in the event of a vacancy, the Mylan Board continues to be validly constituted by the remaining directors, and the Mylan Board may
elect a new director to temporarily fill such vacancy until the next General Meeting and the appointment by the General Meeting of a new director.
In the
event all non-executive directors are absent or unable to act, then the executive directors will be authorized to temporarily entrust the tasks and duties of the non-executive directors to one or more other persons. In the event all directors are
absent or unable to act, the most recent chairman of the Mylan Board and/or such persons that he or she appoints will be temporarily entrusted with the tasks and duties of the non-executive directors until the next General Meeting at which new
non-executive directors are appointed, and such persons will be authorized to temporarily entrust the tasks and duties of the executive directors to one or more other persons until the next General Meeting at which a new executive director or
directors are appointed.
Transfer of Shares
If our shares are not admitted to trading on a regulated market or multilateral trading facility in a Member State of the European Economic Area or a
comparable stock exchange functioning elsewhere, the issuance and transfer of our ordinary shares will require a notarial deed, executed before a civil law notary officiating in a municipality in the Netherlands. Our ordinary shares are listed on
NASDAQ and the TASE (see Listing below beginning on page 119 of this prospectus) and, accordingly, the issuance or transfer of our shares, irrespective of which class it concerns, does not require a notarial deed. For as long as
our ordinary shares are listed on NASDAQ (or the New York Stock Exchange), the property law aspects with respect to the ordinary shares which have been included in a register administered by a transfer agent shall be governed by the laws of the
State of New York.
Any transfer of our preferred shares is restricted under our Articles and will require the approval of the Mylan Board.
Form of Shares
Our ordinary
shares have been issued in registered form only. No share certificates will be issued for our ordinary shares, unless the Mylan Board in its discretion otherwise determines. A share register will be kept by us or on our behalf.
Repurchase of Our Shares
Under Dutch law, a company may not subscribe for newly issued shares in its own capital. Subject to certain provisions of Dutch law and our Articles, we are
permitted to acquire fully paid up shares of our share capital for such consideration as the Mylan Board may determine (but within the boundaries set by the General Meeting), to the extent that (i) the shareholders equity less the
acquisition price is not less than the sum of the paid-up and called-up part of our capital and the reserves that we are required to maintain pursuant to Dutch law, (ii) the nominal value of the shares to be acquired in our capital, which we
hold or hold in pledge or which are held by a subsidiary, does not exceed 50 percent of the issued capital, and (iii) the acquisition of such shares has been authorized by the General Meeting. Such authorization will be valid for a maximum of
18 months (subject to further authorizations). The General Meeting has granted an 18 month authorization as of February 27, 2015, which will expire on August 27, 2016, and allows the Mylan Board to repurchase shares at a price per share
consistent with such authorization. Authorization is not required for the acquisition of our ordinary shares listed on NASDAQ or the TASE for the purpose of transferring the shares to employees under our equity incentive plans. Subject to applicable
limits under Dutch law and applicable securities regulation, the Combined Company may engage in share repurchases in 2016; while maintaining our commitment to our investment grade credit rating.
112
Capital Reduction
At the proposal of the Mylan Board, the General Meeting will be permitted to resolve to reduce our issued capital by (i) cancellation of shares held by
us, (ii) reducing the nominal value of a specific class of shares to be effected by an amendment of our Articles, or (iii) cancellation of all preferred shares. A reduction of the nominal value of shares of a specific class without
repayment will be required to be effected proportionally among all shares of that specific class. A resolution that would result in the reduction of capital requires prior or simultaneous approval of the meeting of each group of holders of shares of
the same class whose rights are prejudiced by the reduction. A resolution to reduce capital generally requires a public filing and notice of such filing in a Dutch daily newspaper, allowing our creditors to object to the reduction in capital under
specified circumstances and in a manner specified by Dutch law.
Dividends and Other Distributions
Under Dutch law, distributions may be distributed only to the extent the shareholders equity exceeds the amount of the paid-up and called-up part of the
issued share capital and the reserves that must be maintained under Dutch law or our Articles. Dividends may be declared after adoption of the annual accounts by the General Meeting and only upon the recommendation and proposal of the Mylan Board.
The profits as they appear from the annual accounts will be distributed as follows:
|
|
|
First, if our preferred shares are outstanding, a dividend is distributed to our preferred shares in accordance with our Articles;
|
|
|
|
Second, the Mylan Board will determine which part of the profits remaining after such distribution on our preferred shares, if applicable, will be reserved; and
|
|
|
|
Third, to the extent not distributed as a dividend in respect of our preferred shares and/or reserved as described above, the profits will be available for distribution to holders of Mylan Shares, provided that any such
distribution must be authorized by the Mylan Board.
|
Interim dividends may be declared as provided in our Articles and may be distributed to
the extent that the shareholders equity exceeds the amount of the paid-up and called-up part of the issued share capital and the required legal reserves as described above as apparent from interim financial statements prepared in accordance
with Dutch law.
Annual Meeting of Our Shareholders
Our Articles provide that the annual General Meeting will be held within six months of the end of the financial year in Amsterdam, Rotterdam, The Hague,
Bunschoten-Spakenburg, Haarlemmermeer (Schiphol), Schiermonnikoog, Groningen, or Leeuwarden. Annual General Meetings will be convened by the Mylan Board or the chairman of the Mylan Board (the Chairman) in the manner and with reference
to the applicable provisions of Dutch law. Under our Articles, the notice convening an annual General Meeting will contain the subjects to be dealt with by the General Meeting, the venue and time of the General Meeting, the procedures for
participating and exercising voting rights in the General Meeting and any other information to be added pursuant to applicable law or stock exchange requirements.
Dutch law provides that the record date for an annual General Meeting, if any, will be 28 days prior to the date of such General Meeting.
Extraordinary Meetings of Our Shareholders
Dutch law provides that one or more shareholders representing at least one-tenth of our issued share capital may request the Dutch courts to order that a
General Meeting be held and may, on their application, be authorized by
113
the court to convene a General Meeting. The court will disallow the application if the applicants have not previously requested the board to convene a General Meeting and the Board has taken the
necessary steps so that the General Meeting could be held within six weeks after the request.
In addition, our Articles provide that extraordinary
General Meetings will be held as often as the Chairman, or the Mylan Board, deems necessary.
Our Articles provide that an extraordinary General Meeting
will be held in the manner and with reference to the applicable provisions of Dutch law. Under our Articles, the notice convening an extraordinary General Meeting must at least contain the subjects to be dealt with by the General Meeting, the venue
and time of the General Meeting, and the procedures for participating and exercising voting rights in the General Meeting and any other information to be added pursuant to applicable law or stock exchange requirements.
Dutch law provides that the record date for an extraordinary General Meeting, if any, will be 28 days prior to the date of such General Meeting.
Advance Notice Procedures for a Shareholder Proposal
Our Articles provide that agenda items or proposed resolutions within the authority of shareholders can only be made by one or more of our shareholders
representing at least three percent of our issued capital, must be submitted in writing 60 calendar days before an annual or extraordinary General Meeting, and must otherwise comply with applicable law.
Voting Rights
Each of our
ordinary shares and each of our preferred shares confers the right to cast one vote at the General Meeting. As a result, the number of votes that a shareholder may cast equals the number of shares such shareholder holds. Under Dutch law and our
Articles shareholders do not have cumulative voting rights.
Resolutions of the General Meeting are passed by an absolute majority of the votes cast,
unless Dutch law or our Articles prescribe a larger majority. Under Dutch law or our Articles, the following matters require at least two-thirds of the votes cast at a meeting if less than half of the issued share capital is present or represented:
|
|
|
a resolution to reduce the issued share capital;
|
|
|
|
a resolution to restrict or exclude rights of pre-emption;
|
|
|
|
a resolution to designate the Mylan Board as authorized to restrict or exclude rights of pre-emption; or
|
|
|
|
a resolution to enter into a legal merger or a legal demerger (subject to certain limited exceptions).
|
In
addition, certain amendments to our Articles and certain transactions between us and an interested person must be approved by the General Meeting by a majority of at least 75 percent of the votes cast, representing more than half of the
issued share capital. An interested person is defined by our Articles to mean any person who beneficially owns ten percent or more of our outstanding ordinary shares. See below under Amendment of Our Articles and
Approval of Certain Transactions.
Quorum
Our Articles provide that insofar as Dutch law or our Articles do not prescribe otherwise, resolutions of the General Meeting must be passed by an absolute
majority of votes cast at a General Meeting at which at least one-third of the issued shares are present or represented. Under Dutch law and our Articles, there are special majority and quorum requirements that apply in relation to certain specific
resolutions.
114
Action by Written Consent
Under Dutch law, resolutions of shareholders outside a General Meeting are possible provided the articles of association expressly allow it and subject to
certain other conditions. Our Articles permit our shareholders to take action by unanimous written consent.
Amendment of
Our Articles
Upon a proposal of the Mylan Board, the General Meeting generally will be authorized to resolve to amend our Articles by an absolute
majority of votes cast at a General Meeting at which at least one-third of the issued shares are present or represented. However, resolutions of the General Meeting to amend certain enumerated provisions may only be adopted by the General Meeting
with a majority of at least 75 percent of the votes cast, representing more than half of the issued share capital.
This special shareholder vote
requirement applies to amendments to the provisions of our Articles that (i) require resolutions of the General Meeting be adopted only pursuant to and in accordance with a proposal by the Mylan Board in order to reduce issued share capital:
issue ordinary shares or preferred shares; grant rights to subscribe for ordinary and preferred shares, restrict or waive pre-emptive rights with respect to any issuance of, or grant rights to subscribe for, ordinary and preferred shares; or
delegate the power and authority to take the foregoing actions; approve or enter into any legal merger or demerger; liquidate or dissolve us; make a distribution on our ordinary shares from our profits or reserves; or request that the Mylan Board
file a petition in bankruptcy with respect to us; (ii) provide that the directors are elected upon the binding nomination of the Mylan Board; (iii) provide for the suspension or removal of directors; (iv) govern amendments to our
Articles; (v) establish the competent courts of the Amsterdam, the Netherlands as the sole and exclusive forum for certain legal proceedings; and (vi) require certain transactions between us and an interested person be approved
by a majority of at least 75 percent of the votes cast, representing more than half of the issued share capital, at the General Meeting.
The Mylan Board
may resolve to amend the rules of the Mylan Board (the Board Rules) by the affirmative vote of a majority of the Mylan Board.
Duties of Directors
Under Dutch law, the Mylan Board is collectively responsible for Mylans general affairs and our executive directors are
responsible for our daily management and operations. Our non-executive directors are responsible for providing advice to the Mylan Board, for supervision of the performance of duties by our directors and general supervision of our business. Our
directors must act for the benefit of Mylan and its business, strategy and mission, taking into account the interests of all stakeholders, such as shareholders, creditors, employees, customers, suppliers, relevant patient populations and communities
in which Mylan operates and the importance of the sustainable success of Mylans business. Our directors may not engage in self-dealing, take actions that are devoid of any business rationale, or violate our governing documents.
Limitations on Liability of Directors
Under Dutch law, directors of a Dutch public limited liability company (
naamloze vennootschap
) may not be held jointly and severally liable to the
company for damages unless the director breaches his or her fiduciary duties and a serious reproach can be made against him or her. Directors may be held liable to third parties for any actions that may give rise to a tort.
The tasks of the executive and non-executive directors in a one-tier board such as the Mylan Board may be allocated under or pursuant to our Articles or the
Board Rules, provided that the General Meeting has stipulated whether a director is appointed as executive or as non-executive director and furthermore provided that the task
115
to supervise the performance by the directors of their duties can only be performed by the non-executive directors. In addition, an executive director may not be appointed as the Chairman or
delegated the task of establishing the remuneration of executive directors, or nominating directors for appointment. Tasks that have not been allocated fall within the power of the board as a whole.
Regardless of an allocation of tasks, all directors remain collectively responsible for the general affairs of the company. Therefore, certain important
decisions of the board should be adopted by the board in its entirety. All directors are jointly and severally liable for failure of one or more co-directors. However, an individual director may be exempted from liability if he proves that he cannot
be held seriously culpable for the mismanagement or the improper supervision and that he has not been negligent in seeking to prevent the consequences of the mismanagement or the improper supervision. In this regard a director may refer to the
allocation of tasks between the directors. In certain circumstances, directors may incur additional specific civil, administrative and criminal liabilities.
Indemnification of Directors and Officers
Without prejudice to any indemnity to which such person may be contractually or otherwise entitled and to the fullest extent permitted by applicable Dutch law,
as the same exists or may be amended (but, in the case of such amendment, only to the extent that such amendment permits us to provide broader indemnification rights than such law permitted us to provide prior to such amendment), the Articles
provide that we will indemnify any director or officer who was, is, or becomes in his or her capacity as director or officer a party or witness or is or becomes threatened to be made a party or witness to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, or administrative or any action, suit, or proceeding in order to obtain information, against any and all liabilities including all expenses (including attorneys fees), judgments, fines,
amounts paid in settlement, and other financial losses, actually and reasonably incurred by him in connection with such action, suit, or proceeding. As a Dutch company, our indemnification obligations to our directors and officers will be subject to
and interpreted in accordance with Dutch law.
Under Dutch law, indemnification generally will not be available to any person in respect of any claim,
issue, or matter as to which such person will have been adjudged in a final and non-appealable judgment by a Dutch or other court of competent jurisdiction to be liable for intentional recklessness or willful misconduct in the performance of his or
her duty to us unless such court determines that such person is fairly and reasonably entitled to such indemnification despite the adjudication of such liability, or to the extent any related costs and losses have been insured and reimbursed to such
person under any applicable insurance policy. Also, no indemnification will be made in respect of any claim brought by us and for which the person is adjudged in a final and non-appealable judgment to be liable to us unless the court or we have
determined that indemnification of some or all expenses incurred by the person is appropriate and permitted under applicable law.
We also have entered
into indemnification agreements with each of our directors and certain of its officers that provide them with substantially similar indemnification rights to those provided under the Articles.
The Articles also provide that we may maintain an insurance policy which insures directors and officers against certain liabilities which might be incurred in
connection with the performance of their duties. We currently maintain such a policy. The description of indemnity herein is merely a summary of the provisions in the Articles and other indemnification agreements, and such description shall not
limit or alter the provisions in the Articles or other indemnification agreements.
Forum Selection
Unless we consent in writing to the selection of an alternative forum, the competent courts of Amsterdam, the Netherlands will be the sole and exclusive forum
for any action asserting a claim for breach of a duty owed by any of our directors, officers, or other employees (including any of our former directors, former officers, or other
116
former employees to the extent such claim arises from such director, officer, or other employees breach of duty while serving as our director, officer, or employee) to us or our
shareholders; any action asserting a claim arising pursuant to or otherwise based on any provision of Dutch law or our Articles; any action asserting a claim that is mandatorily subject to Dutch law; or to the extent permitted under Dutch law, any
derivative action or proceeding brought on behalf of us, in each such case subject to such court having personal jurisdiction over the indispensable parties named as defendants therein.
Compensation of Directors
Dutch law requires that we have a policy governing the remuneration of directors adopted by the General Meeting upon the recommendation and proposal of the
Mylan Board. The remuneration of each individual executive director will be determined by the Mylan Board with due observance of the remuneration policy. The executive directors may not participate in the deliberation and the decision-making process
of the Mylan Board if it concerns the remuneration of an executive director. The remuneration of the individual non-executive directors will be determined by the Mylan Board with due observance of the remuneration policy.
Proposals concerning plans or arrangements in the form of shares or rights to subscribe for shares for directors will be submitted by the Mylan Board to the
General Meeting. The proposal must include the maximum number of shares and/or options that may be granted to directors under the plan and which criteria apply to the granting of such shares or options or to the modification of these arrangements.
Protective Measures
Under Dutch law, various protective measures are permissible. Our governance arrangements include several provisions that may have the effect of delaying a
potential takeover or making a takeover more difficult or less attractive, including:
|
|
|
we have issued to Stichting Preferred Shares Mylan (a Dutch foundation (
stichting
)) a call option to subscribe for our preferred shares that, if exercised (see Comparison of Shareholders
RightsRights Agreement/Preferred Shares beginning on page 139 of this prospectus), could discourage, prevent or delay a potential takeover, allow us to further discuss with a potential acquirer or activist shareholder its future plans
for us as well as to search for strategic alternatives;
|
|
|
|
requirements that certain matters, including the amendment of our Articles (see Approval of Certain Transactions beginning on page 117 of this prospectus below), may only be brought to the General
Meeting for a vote upon a proposal by the Mylan Board; and
|
|
|
|
subject the appointment of our directors to a binding nomination by the Mylan Board.
|
Approval of Certain Transactions
Under Dutch law, resolutions of a companys board of directors regarding a significant change in the
identity or nature of the company or its business must be approved at a General Meeting. Such resolutions include in any event the transfer of the business or a substantial part thereof, entering into or terminating a long-lasting cooperation
agreement with a third party, and the sale or purchase of a company or a stake in a company with a value of one-third of the assets of the company (according to the most recently adopted annual accounts plus the explanatory notes to that balance
sheet).
Our Articles require that certain transactions between us and an interested person be approved by the a majority of at least 75
percent of the votes cast, representing more than half of the issued share capital, of the General Meeting. An interested person is defined by our Articles to mean any person who beneficially owns ten percent or more of our outstanding
ordinary shares.
117
The transactions subject to this special vote requirement include (i) any legal merger to which we and an
interested person are parties, (ii) any legal demerger to which we and an interested person are parties, (iii) any sale, lease, exchange, or other disposition of all or substantially all of our properties or assets to an interested person,
(iv) the adoption of any plan or proposal for our liquidation or dissolution under which the rights of an interested person differ from those accorded to other holders of our ordinary shares, or (v) any transaction of a character described
in (i), (ii), (iii), or (iv) involving an affiliate or associate of an interested person or an associate of any such affiliate. For purposes of this provision, (i) an affiliate of a person is another
person that directly or indirectly controls, is controlled by, or is under common control with such person and (ii) an associate of a person is (a) any corporation or organization of which such person is an officer, partner, or
beneficial owner of ten percent or more of any class of equity securities, (b) any trust or estate in which such person has a ten percent or greater beneficial interest or for which such person serves as a trustee or in a similar capacity, or
(c) any relative or spouse of such person, or relative of such spouse, who has the same residence as such person.
This special shareholder vote
requirement does not apply to any transaction which is (i) approved by the vote of a majority of the Mylan Board prior to the time the interested person connected with the transaction became an interested person or (ii) approved by the
Mylan Board prior to the consummation by the vote of an absolute majority of the votes cast, whereby the majority of all executive and non-executive directors of the Mylan Board who were not interested persons, an affiliate, associate, or agent of
such interested persons, or an associate or agent of any such affiliate voted in favor of the resolution.
Our Articles provide that the General Meeting
may only adopt certain resolutions upon the recommendation and proposal of the Mylan Board. These resolutions concern, amongst other items, (i) any amendment to our Articles; (ii) any legal merger of us; (iii) any demerger; or
(iv) any dissolution of us.
Squeeze-Out
Under Dutch law, a shareholder whoalone or together with one or more group companiesfor his/their own account contribute(s) at least 95 percent of
a companys issued share capital may initiate proceedings against the companys minority shareholders jointly for the transfer of their shares to the claimant. The proceedings are held before the Enterprise Chamber of the Amsterdam Court
of Appeal (
Ondernemingskamer van het GerechtshofAmsterdam
) (the Enterprise Chamber). The Enterprise Chamber may grant the claim for squeeze-out in relation to all minority shareholders and will determine the price to be paid for
the shares, if necessary after appointment of one or three experts who will offer an opinion to the Enterprise Chamber on the value to be paid for the shares of the minority shareholders. Once the order to transfer becomes final before the
Enterprise Chamber, the person acquiring the shares must give written notice of the date and place of payment and the price to the holders of the shares to be acquired whose addresses are known to him. Unless the addresses of all of them are known
to the acquiring person, such person is required to publish the same in a Dutch daily newspaper with a national circulation.
Dissolution/Liquidation
A
resolution to dissolve our company may be proposed by the Mylan Board and adopted by an absolute majority of the votes cast, in a meeting in which at least one third of our issued share capital is present or represented.
If we are dissolved, our assets would be used for payment of debts. After payment of debts and the costs of liquidation, payments are first made to the
holders of any outstanding preferred shares in accordance with the procedures set forth in our Articles and below, and the balance of our assets would be paid to the holders of our ordinary shares in proportion to the number of our ordinary shares
they held.
If our preferred shares are outstanding at the time of a dissolution, prior to the distribution to the holders of our ordinary shares, an
amount will be paid to the holders of our preferred shares equal to redemption amounts,
118
increased by: (i) any deficit in the payment of dividend referred to in our Articles and (ii) an amount equal to the percentage referred to in our Articles on the compulsory amount paid
on the preferred shares, calculated over the period starting on the first day after the last full financial year for which the company has adopted annual accounts prior to the liquidation and ending on and including the day of the payment on
preferred shares referred to above, plus any accrued and unpaid dividends for prior periods, with due observance of the fact that any and all dividends and/or other distributions paid on the preferred shares relating to such periods will be deducted
from the payment.
Listing
Our ordinary shares are listed on NASDAQ and the TASE, in each case under the ticker symbol MYL.
119
COMPARISON OF SHAREHOLDERS RIGHTS
Mylan is a public limited liability company (
naamloze vennootschap
) organized and existing under the laws of the Netherlands. The rights of Mylan
shareholders are governed by Dutch law, including the Dutch Civil Code, the Dutch Corporate Governance Code (the provisions of the Dutch Corporate Governance Code apply to Mylan on a comply or explain basis) and Mylans constituent
documents, including the Mylan Articles. Meda is a public limited liability company organized and existing under the laws of Sweden. The rights of Meda shareholders are governed by Swedish law and regulations, Nasdaq Stockholms Rulebook for
issuers, the Swedish Corporate Governance Code (the Swedish Code) (the provisions of the Swedish Code apply to Meda on a comply or explain basis) and by the Meda Articles.
After the completion of the transaction, shareholders of Meda will become shareholders of Mylan and their rights as shareholders will become subject to Dutch
law, including the Dutch Civil Code, the Dutch Corporate Governance Code and Mylans organizational documents, including the Mylan Articles. It should be noted that Mylan is not required to comply with the corporate governance rules of the
Swedish Companies Act or of the Swedish Code.
This section summarizes the material differences between the rights of Mylan shareholders and the rights of
Meda shareholders. The following summary is not a complete statement of the rights of shareholders of either of the two companies or a complete description of the specific provisions referred to below. This summary is qualified in its entirety by
reference to the Dutch Civil Code, the Dutch Corporate Governance Code, the Swedish Companies Act, the Swedish Code and Mylan and Medas respective organizational documents, which you are urged to read carefully. To find out where you can
obtain copies of these documents, see Where You Can Find More Information beginning on page 162 of this prospectus.
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
Authorized Share Capital
|
|
The Meda Articles, state that Medas share capital shall be no less than SEK 200,000,000 and no more than SEK 800,000,000 and there shall be no less than 200,000,000 shares and no more than 800,000,000 shares outstanding. Under
the Swedish Companies Act, the articles of association of a company must state the share capital or, where the share capital may be determined at a lower or higher amount without an alteration of the articles of association, the minimum share
capital and maximum share capital (in which case the minimum share capital shall be not less than one-fourth of the maximum share capital). The articles of association must also state the number of shares or, where a minimum share capital and a
maximum share capital are stated in the articles of association, a minimum and
|
|
The authorized share capital of Mylan is 24,000,000, nominal value, divided into 1,200,000,000 Mylan Shares, each with a nominal value of 0.01, and 1,200,000,000 Mylan preferred shares, each with a nominal value of
0.01.
|
120
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
maximum number of shares whereupon the relationship between the minimum share capital and the minimum number of shares shall be the same as the relationship between the maximum share capital and the maximum number of shares. Under
the Swedish Companies Act, a company may issue different classes of shares, provided that such classes of shares are specified in the companys articles of association and that the maximum number of shares in the articles of association are not
exceeded.
|
|
|
|
|
|
Corporate objectives
|
|
Under Article 3 of the Meda Articles, Medas corporate objectives are to trade and manufacture health service, medical service and health and wellness products and any other activities comparable therewith. The company shall
also own and manage real and personal property, including shares and interests in other companies.
|
|
Under Article 3 of the Mylan Articles, Mylans corporate objectives are:
a. to participate in, finance, collaborate with and conduct the management of companies,
businesses and other enterprises and to provide advice and other services with respect thereto;
b. to acquire, own, operate and use, to sell, assign, transfer or otherwise dispose of or to pledge, hypothecate or otherwise encumber any assets, properties
or other rights, including intellectual property rights and real and personal property, whether tangible or intangible;
c. to hold and invest cash, securities and other funds;
d. to provide guarantees, security or other credit support for the debts and obligations of legal persons, legal entities or companies with which Mylan is
affiliated in a group (as defined in article 2: 24b of the Dutch Civil Code) or third parties; and
|
121
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
|
|
e. to take any and all actions relating to, in connection with or in furtherance of the foregoing to the fullest extent permitted by applicable law. Within the scope and for the achievement of such purposes, Mylan may operate,
manage, participate in and control one or more companies engaged or operating in, among other areas, the pharmaceutical and healthcare industries.
|
|
|
|
Authorization and Issuance of Share Capital
|
|
Under the Swedish Companies Act, resolutions on new share issues are passed by the shareholders at a general meeting of shareholders. At a
general meeting of shareholders, the shareholders may also authorize the board of directors to issue new shares, provided that the authorization is within the limits of the number of shares and share capital set out in the companys articles of
association. Further, the board of directors may resolve to issue new shares without such authorization, provided that the resolution is conditioned upon the shareholders approval at a general meeting of shareholders and within the limits of
the number of shares and share capital set out in the companys articles of association. Under the Swedish Companies Act, an alteration of the articles of association to amend the limits of the number of shares and share capital requires a
resolution passed at a general meeting of shareholders. The number of votes required for a valid resolution depends on the type of alteration. However in any case, a valid resolution requires not less than two-thirds of the votes cast and of the
shares represented at the meeting.
At the annual general meeting of the shareholders
of Meda held on
|
|
Until February 27, 2020, the Mylan Board may decide to issue shares (including subscription rights thereto) up to the maximum authorized share capital of Mylan. From and after February 27, 2020, the General Meeting will have the
power and authority upon a proposal duly made by the Mylan Board to authorize the issuance of shares (including subscription rights thereto) up to the maximum authorized share capital of Mylan at the time of such issuance, provided that the General
Meeting may delegate to and vest the Mylan Board with the power and authority to resolve, from time to time, to issue shares up to such maximum amount (but in any event not to exceed the authorized share capital of Mylan at the time of such
issuance) and for such period (but in any event not to exceed a period of five years) as the General Meeting may determine. Each such delegation by the General Meeting may be extended from time to time thereby, provided that no extension will result
in such delegation exceeding five years, the maximum period permitted by the applicable provision of Dutch law. Unless otherwise
|
122
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
May 6, 2015, the Meda Board was authorized to issue no more than 36,546,737 new shares on one or more occasions during the period until the next annual general meeting of Meda shareholders.
|
|
expressly provided therein, any such delegation by the General Meeting to the Mylan Board of the power and authority to resolve on the issuance of shares will be irrevocable. The consideration for which any shares will be issued
(including subscription rights thereto), as resolved by the General Meeting or the Mylan Board, as applicable, and the terms and conditions of such issuance of shares will be as set forth in the resolution of the General Meeting or the Mylan Board,
as applicable, resolving on the issuance thereof.
|
|
|
|
Voting rights
|
|
Under the Swedish Companies Act, different classes of shares may have different voting rights. However, no share may have a voting right which exceeds the voting rights of any other share by more than ten times. The Meda Articles
allow class A shares, with one vote per share, and class B shares, with one-tenth of a vote per share. No Meda class B shares are outstanding.
|
|
Each Mylan Share and each Mylan preferred share confers the right to cast one vote at the General Meeting. As a result, the number of votes that a shareholder may cast equals the number of shares such shareholder holds. Under Dutch
law and the Mylan Articles, shareholders do not have cumulative voting rights.
|
|
|
|
Number of Directors
|
|
The Meda Board has 9 members.
|
|
The Mylan Board has 13 members.
|
|
|
|
Term of the Board of Directors
|
|
Under Swedish law, the members of the board of directors are elected for the period until the end of the next annual general meeting of shareholders, unless a longer term of up to four financial years is set out in the articles of
association. The Meda Articles provide that each Meda director is up for re-election at each annual general meeting of shareholders.
|
|
Dutch law permits staggering terms of directors at the time of appointment. Mylan has not adopted a staggered board. Accordingly, the Mylan directors will serve one-year terms and the entire Mylan Board will be up for re-election at
each annual General Meeting.
|
|
|
|
Nomination of Directors
|
|
Under Swedish law, the board of directors shall, except for any employee representatives, be elected by the annual general meeting of shareholders, unless the articles of association provide
|
|
Mylans directors are appointed by the General Meeting upon the binding nomination by the Mylan Board. The General Meeting may only overrule the binding nomination by
a
|
123
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
otherwise. The Meda Articles do not provide otherwise. The Swedish Code includes certain independence requirements for the directors, according to which more than 50 percent of the directors shall be independent of the company and
two out of these shall also be independent of major shareholders. Companies to which the Swedish Code applies shall have a nomination committee. In addition to nominating directors, the nomination committee shall nominate the Chairman of the board
of directors and the auditors and shall also propose fees to each director and to the auditors. The nomination committees proposals are to be presented in the notice of the annual general meeting of shareholders and on the companys
website.
|
|
resolution adopted by at least a two-thirds majority of the votes cast, provided such majority represents more than half of the issued share capital. If the General Meeting overrules a binding nomination for a director, the Mylan
Board will promptly make a new binding nomination to be submitted to a subsequent General Meeting. If the Mylan Board fails to exercise its right to submit a binding nomination for a director or fails to do so in a timely manner, the General Meeting
may nominate and appoint a director (with a majority of at least two-thirds of the votes cast representing more than half of Mylans issued share capital), provided that the relevant nominee(s) is/are named in the agenda of the meeting or the
explanatory notes thereto.
|
|
|
|
Removal of Directors
|
|
Directors may be removed from office, with or without cause, by the general meeting of the shareholders of Meda.
|
|
Directors may be suspended or removed by the General Meeting, with or without cause, at any time. The Mylan Articles provide that a resolution of the General Meeting to suspend or remove a director pursuant to and in accordance with
a proposal by the Mylan Board will be passed with an absolute majority of the votes cast. A resolution of the General Meeting to suspend or remove a director other than pursuant to and in accordance with a proposal by the Mylan Board will require
two-thirds majority of the votes cast, representing more than half of the issued share capital.
|
|
|
|
Vacancies on the Board of Directors
|
|
Under the Swedish Companies Act, if a directors appointment terminates prematurely and there is no deputy director available to
|
|
The Mylan Articles provide that in the event of a vacancy, the Mylan Board continues to be validly constituted by the
|
124
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
replace him or her, the other directors shall take measures to appoint a new director for the remainder of the term. Such measures need not, however, be taken if the outgoing director was an employee representative. Furthermore, the
measures that may be taken are limited by the provisions of the Swedish Companies Act regarding appointment of directors, which provide that all board appointments will be made by a general meeting of shareholders unless the companys articles
of association provide otherwise. The Meda Articles do not provide for an alternative means of appointing directors. As a result, all Medas directors are required to be appointed by Medas general meeting of shareholders and the only
measure available to Meda directors to fill a vacancy on the Meda Board is to summon a general meeting of shareholders to appoint a new director.
|
|
remaining directors, and the Mylan Board may elect a new director to temporarily fill such vacancy until the next General Meeting and the
appointment by the General Meeting of a new director.
In the event all non-executive
directors are absent or unable to act, then the executive directors will be authorized to temporarily entrust the tasks and duties of the non-executive directors to one or more other persons. In the event all directors are absent or unable to act,
the most recent chairman of the Mylan Board and/or such persons that he or she appoints will be temporarily entrusted with the tasks and duties of the non-executive directors until the next General Meeting at which new non-executive directors are
appointed, and such persons will be authorized to temporarily entrust the tasks and duties of the executive directors to one or more other persons until the next General Meeting at which a new executive director or directors are
appointed.
|
|
|
|
Duties of Directors
|
|
Under the Swedish Companies Act, the board of directors is responsible for the organization of the company and the management of the companys affairs. The board shall regularly assess the companys financial position and,
where the company is the parent company in a group, the groups financial position. Moreover, the board shall ensure that the companys organization is structured in such a manner that accounting, management of funds, and the
companys finances in general are monitored in a satisfactory manner.
|
|
Under Dutch law, the board of directors is collectively responsible for the general affairs of the company and executive directors are responsible for the daily management and operations of the company. Non-executive directors are
responsible for providing advice to the board, for supervision of the performance of duties by the directors and general supervision of the business. Directors must act for the benefit of the company and its business, strategy and mission, taking
into account the interests
|
125
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
|
|
of all stakeholders, such as shareholders, creditors, employees, customers, suppliers, relevant patient populations and communities in which Mylan operates, and the importance of the sustainable success of the companys
business. Directors may not engage in self-dealing, take actions that are devoid of any business rationale or violate a companys governing documents.
|
|
|
|
Conflicts of Interest of Directors
|
|
Under Swedish law, a director may not be involved in (1) considering an agreement between the director and the company, (2) an agreement between the company and another party if the director in question has a material interest
potentially conflicting with the interests of the company or (3) an agreement between the company and a legal person that the director is entitled to represent, alone or with another person.
|
|
Under Dutch law, a director may not participate in the deliberations and decision-making if he or she has a direct or indirect personal interest therein that is contrary to the interests of the company and its business. In such
event, Dutch law provides that the other directors will be authorized to adopt the relevant resolution. If all directors have a conflict of interest, the Mylan Articles provide that the resolution may nonetheless be adopted the Mylan
Board.
|
|
|
|
Limitations on Liability of Directors
|
|
An action for damages on behalf of the company may be available in certain circumstances against a director. Such an action may be instituted if at a general meeting of shareholders the majority, or a minority comprising the owners
of at least one-tenth of all outstanding shares, has supported the proposal that such an action be instituted. The action for damages in favor of a company may be conducted by owners of at least one-tenth of all shares.
|
|
Under Dutch law, directors of a Dutch a public limited liability company
(naamloze vennootschap)
may not be held jointly and severally liable to the company for damages unless the director breaches his or her duties and a
serious reproach can be made against such director. Directors may be held liable to third parties for any actions that may give rise to a tort.
|
|
|
|
Indemnification of Directors and Officers
|
|
The Swedish Companies Act does not contain specific provisions requiring that the articles of association provide for indemnification of directors,
|
|
Without prejudice to any indemnity to which such person may otherwise be entitled and to the fullest extent permitted by applicable Dutch law, the Mylan
|
126
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
officers or other persons. The Meda Articles do not provide for any indemnification. It is not uncommon, however, for listed Swedish companies to have specific insurance protection arrangements for its directors and officers.
|
|
Articles provide that the company will indemnify any director or officer who was or is in his capacity as director or officer a party or is
threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, or administrative or any action, suit or proceeding in order to obtain information (other than an action, suit, or
proceeding instituted by or on behalf of Mylan), against any and all liabilities including all expenses (including attorneys fees), judgments, fines, amounts paid in settlement, and other financial losses, actually and reasonably incurred by
him in connection with such action, suit, or proceeding.
No indemnification will be
made to any person in respect of any claim, issue, or matter as to which such person will have been adjudged in a final and non-appealable judgment by a Dutch court to be liable for intentional recklessness or willful misconduct in the performance
of his duty to the Company unless such court will determine that such person is fairly and reasonably entitled to such compensation despite the adjudication of such liability; or to the extent any related costs and losses have been insured and
reimbursed to such person under any applicable insurance policy.
|
|
|
|
Compensation of Directors
|
|
Under the Swedish Companies Act, the remuneration to the board of directors shall be determined by the annual general meeting of shareholders, specifying the amount for each director. For
|
|
Dutch law requires that Mylan has a policy governing the remuneration of directors and the Mylan Articles provide that such policy may only be adopted by the General
Meeting
|
127
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
companies complying with the Swedish Code, the nomination committees proposal to the annual general meeting of shareholders shall include a proposal regarding the remuneration to each director.
|
|
upon the recommendation and proposal of the Mylan Board. The remuneration of each individual executive director will be determined by the
Mylan Board with due observance of the remuneration policy. The executive directors may not participate in the deliberation and the decision-making process of the Mylan Board if it concerns the remuneration of an executive director. The remuneration
of the individual non-executive directors will be determined by the Mylan Board with due observance of the remuneration policy.
Proposals concerning plans or arrangements in the form of Mylan Shares or rights to subscribe for Mylan Shares for directors will be submitted by the Mylan
Board to the General Meeting. The proposal must include the maximum number of Mylan Shares and/or options that may be granted to directors under the plan and which criteria apply to the granting of such shares or options or to the modification of
these arrangements.
|
|
|
|
Board Diversity Requirements
|
|
Under Swedish law, there are no requirements of board diversity regarding gender balance. However, according to the Swedish Code, the board of directors shall with regards to the companys operations, phase of development
and conditions in the appropriate composition, be characterized by diversity and breadth in the elected members skills, experience and background. The Swedish Code also states that gender balance should be sought.
|
|
Under Dutch law, there are no requirements of board diversity regarding gender balance. However, the Dutch Code recommends that the Mylan Board should have a profile of its size and composition, dealing also with the aspects of
diversity in the composition of the Mylan Board that are relevant to Mylan, and stating what specific objectives are pursued by the Mylan Board in relation to diversity.
|
|
|
|
Annual Meetings of Shareholders
|
|
Under the Swedish Companies Act, general meetings of
|
|
The Mylan Articles provide that the annual General Meeting will
|
128
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
shareholders shall be held in the city where the board of directors holds its office. However, the articles of association may provide
that a meeting must or may be held at another specified place in Sweden. The Meda Articles provide that a general meeting of Meda shareholders must be held in Solna, Stockholm, Göteborg or Malmö.
An annual general meeting of shareholders must be held within six months of the expiry of
each financial year. The Swedish Code stipulates that the chairman of the board of directors, together with a quorum of directors, as well as the managing director, shall attend general meetings of shareholders. The chairman of the general meeting
of shareholders shall be nominated by the nomination committee and elected by the general meeting of shareholders. The minutes of a general meeting of shareholders shall be available on the companys website no later than two weeks after the
meeting.
|
|
be held within six months of the end of the financial year in Amsterdam, Rotterdam, The Hague, BunschotenSpakenburg, Haarlemmermeer (
Schiphol
), Schiermonnikoog, Groningen, or Leeuwarden. Annual general meetings of
shareholders will be convened by the Mylan Board or the chairman of the Mylan Board in the manner and with reference to the applicable provisions of Dutch law.
|
|
|
|
Extraordinary Meetings of Shareholders
|
|
Extraordinary general meetings of shareholders may be summoned by the board of directors if the board believes that reason exists to hold a general meeting of shareholders prior to the next annual general meeting of shareholders.
The board of directors shall also convene an extraordinary general meeting of shareholders if an auditor of the company or owners of not less than one-tenth of all shares in the company demand in writing that such a meeting be convened to address a
specified matter.
|
|
Dutch law provides that one or more shareholders representing at least one-tenth of Mylans issued share capital may request the Dutch courts to order that a General Meeting be held and may, on their application, be authorized
by the court to convene a General Meeting. The court will disallow the application if the applicants have not previously requested the board to convene a General Meeting and the Mylan Board has taken the necessary steps so that the General Meeting
could be held within six weeks after the request. In addition, the Mylan Articles provide that extraordinary General Meetings
|
129
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
|
|
may be convened by the chairman of the Mylan Board as prescribed in the Mylan Board Rules. The Mylan Board Rules require any extraordinary General Meeting to be called pursuant to a two-thirds vote of the Mylan Board.
|
|
|
|
Record Date
|
|
Under the Swedish Companies Act, the provisions applicable to companies with shares affiliated with a central securities depository such as Euroclear (a pre-requisite to all companies with its shares listed on a regulated market
such as Nasdaq Stockholm) states that anyone listed as a shareholder in an excerpt or other presentation of the share register five weekdays before the general meeting of shareholders is entitled to take part in a general meeting of shareholders.
The articles of association may provide that, in order to take part in a general meeting of shareholders, a shareholder must so notify the company no later than the date specified in the notice of the general meeting of shareholders. That date may
not be a Sunday, other public holiday, Saturday, Midsummers Eve, Christmas Eve or New Years Eve and may not occur earlier than the fifth weekday before the general meeting of shareholders.
|
|
Dutch law provides that the record date for a General Meeting, if any, will be 28 days prior to the date of such General Meeting.
|
|
|
|
Notice of Shareholder Meetings
|
|
The Meda Articles provide that notice convening general meetings of the Meda shareholders shall be issued through announcement in the Swedish National Gazette (Post- och Inrikes Tidningar) as well as on the companys website.
Announcement to the effect that a notice convening a general meeting of the Meda shareholders has been issued shall be made in the Swedish daily newspaper Svenska Dagbladet.
|
|
The Mylan Articles provide that a General Meeting will be convened by the Mylan Board or the chairman of the Mylan Board in the manner and with reference to applicable law and stock exchange
regulations.
|
130
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
Advance Notice Procedures for a Shareholder Proposal or Director Nomination
|
|
A shareholder who wishes to have a matter addressed at a general meeting of shareholders shall submit a written request therefor to the board of directors. The matter shall be addressed at the meeting, provided the request was
received by the board of directors: (i) not later than one week prior to the earliest date on which notice to attend the general meeting of shareholders may be issued; or (ii) after the date specified in clause (i), but in due time for the matter to
be included in the notice to attend the meeting. A shareholder who wishes to nominate a person for the board of directors, or submit proposals regarding other matters handled by the nomination committee, shall submit a proposal to the nomination
committee in accordance with instructions provided on the companys website.
|
|
The Mylan Articles provide that agenda items or proposed resolutions within the authority of shareholders may only be made by one or more shareholders representing at least three percent of the issued capital of Mylan, must be
submitted to Mylan at least 60 calendar days prior to any General Meeting, and must otherwise comply with applicable law.
|
|
|
|
Shareholder Action by Written Consent
|
|
There is no right of shareholders to act by written consent unless all shareholders of the company agree.
|
|
Under Dutch law, resolutions of shareholders outside a General Meeting are possible provided the articles of association allow it and subject to certain other conditions. The Mylan Articles permit shareholders to take action by
unanimous written consent.
|
|
|
|
Quorum of Shareholders
|
|
Under Swedish law, there are special majority and quorum requirements that apply in relation to specific resolutions. Ordinary resolutions of the general meeting of shareholders are in general passed, if the articles of association
do not state otherwise (which the Meda Articles do not), by a simple majority of the votes cast. In the event of a tied vote, the chairman has the deciding vote.
|
|
The Mylan Articles provide that, insofar as Dutch law or the Mylan Articles do not prescribe otherwise, resolutions of the General Meeting
must be passed by an absolute majority of votes cast at a General Meeting at which at least onethird of the issued share capital is present or represented.
Under Dutch law and the Mylan Articles, there are special majority and quorum requirements that apply in relation to certain specific
resolutions.
|
131
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
Derivative Shareholder Suits
|
|
Derivative shareholder suits are not permitted in Sweden. However, owners of at least one-tenth of all shares in the company may bring an action for damages for the company in their own name against
inter alia
a founder,
director, managing director, auditor, general examiner or special examiner who, in performing its duties, intentionally or negligently causes damage to the company.
|
|
Derivative shareholder suits are not permitted in the Netherlands. If a person is liable to a Dutch public limited liability company
(naamloze vennootschap)
, only the company can bring a civil action against that person. Individual shareholders do not have the right to bring an action on behalf of the company of which they are a shareholder. If a director is liable to the
company, for example, on the grounds of improper performance of his or her duties, only the company itself can bring a civil action against that director. Individual shareholders do not have the right to bring an action against the director.
A shareholder can sue in his own name for damages that the shareholder has suffered
directly, i.e. not derived from the companys damages. Dutch law provides for the possibility to initiate such shareholder actions collectively. A foundation or association whose objective is to protect the rights of a group of persons having
similar interests (a class) can commence a collective action (SPV). Thus far, such collective action can only result in a declaratory judgment
(verklaring voor recht)
. However, recently a draft bill has been proposed
by the government to make it possible that collective redress at the initiative of an SPV may also take the form of a claim for monetary damages. If a settlement is reached with an SPV, a Dutch court may declare the settlement binding upon all
members of the relevant class on an opt-out basis.
|
132
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
|
|
Under Dutch law, shareholders who satisfy certain threshold requirements and certain other stakeholders of the company can initiate inquiry proceedings with the Enterprise Chamber. Claimants may request an inquiry into the policy of
the company and the conduct of its business. The Enterprise Chamber will only order an inquiry if it finds that wellfounded reasons exist to doubt the soundness of the policies of the company or the conduct of its business. The proceedings may
only be initiated after the claimant has given the board of the company advance written notice of its objections to the policy of the company or the conduct of the business. Ample time should be given to the company to examine the objections and to
address the alleged issues. During the entire proceedings, the Enterprise Chamber may impose immediate provisional measures, for example, a temporary deviation from the articles of association and/or appointment of interim board members.
|
|
|
|
Inspection of Books and Records
|
|
Under Swedish law, the board of directors must make accounting documents and the auditors report, or copies of those documents, available at the company to shareholders for at least three weeks immediately before the annual
general meeting of shareholders. Copies of the documents must be sent immediately, and at no cost to the recipient, to shareholders who so request and state their postal address.
|
|
Under Dutch law, the Mylan Board is required to provide the General Meeting with all information that the shareholders require for the exercise of their powers, unless this would be contrary to Mylans overriding interest. The
Mylan Board is required to submit the statutory Dutch annual accounts of Mylan to the General Meeting for adoption. The Mylan Board will keep a record of all resolutions adopted by the General Meeting,
which
|
133
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
The documents must also be made available on the companys website for at least three weeks immediately before the annual general meeting of shareholders and on the day of the general meeting of shareholders. They must also
be presented at the general meeting of shareholders. The chairman must ensure that minutes are kept at a general meeting of shareholders. Minutes must be available to shareholders at the offices of the company no later than two weeks after a general
meeting of shareholders. A copy of the minutes must also be sent to shareholders who so request and who state their postal address, as well as be available on the companys website for a period of at least three years.
|
|
record will be available at the offices of Mylan for inspection by shareholders. Each shareholder will upon its request be provided with a copy from such record. Under Dutch law, the shareholders register is available for
inspection by the shareholder.
|
|
|
|
Amendment of Governing Documents
|
|
Under the Swedish Companies Act, an alteration of the articles of association requires a resolution passed at a general meeting of shareholders. The number of votes required for a valid resolution depends on the type of alteration.
However, in any case, a valid resolution requires not less than two thirds of the votes cast and of the shares represented at the meeting. The board of directors is not authorized to make amendments to the articles of association.
|
|
Upon a proposal of the Mylan Board, the General Meeting generally will be authorized to resolve to amend the Mylan Articles by an absolute majority of votes cast at a General Meeting at which at least one-third of the issued shares
are present or represented. However, resolutions of the General Meeting to amend certain enumerated provisions may only be adopted by the General Meeting with a majority of at least 75 percent of the votes cast, representing more than half of the
issued share capital. This special shareholder vote requirement applies to amendments to the provisions of the Mylan Articles that (i) require resolutions of the General Meeting be adopted only pursuant to and in accordance with a proposal by the
Mylan Board in order to reduce issued share capital; issue ordinary shares or
|
134
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
|
|
preferred shares; grant of rights to subscribe for ordinary and preferred shares, restrict or waive pre-emptive rights with respect to any
issuance of, or grant of rights to subscribe for, ordinary and preferred shares; or delegate the power and authority to take the foregoing actions; (ii) approve any legal merger or demerger; liquidate or dissolve Mylan; make a distribution from
profits or reserves of Mylan; or request that the Mylan Board file a petition in bankruptcy with respect to Mylan; (iii) provide that the directors are elected upon the binding nomination of the Mylan Board; (iv) provide for the suspension or
removal of directors; (v) govern amendments to the Mylan Articles; (vi) establish the competent courts of the Amsterdam, the Netherlands as the sole and exclusive forum for actions brought against officers and directors; and (vii) require certain
transactions between Mylan and an interested person be approved by a majority of at least 75 percent of the votes cast, representing more than half of the issued share capital, of the General Meeting.
The Mylan Board may resolve to amend the Mylan Board Rules by the affirmative vote of a
majority of the Mylan Board.
|
|
|
|
Shareholder Approval of Business Combinations
|
|
Under Swedish law, certain resolutions may require an approval at a general meeting of shareholders, such as a legal merger or if the business ceases to exist. In particular, if a resolution is in conflict with the objects of the
company, as defined in the articles of association, the objects of the company, and thus the
|
|
Under Dutch law, resolutions of a companys board of directors regarding a significant change in the identity or nature of the company or its business must be approved at a General Meeting. Such resolutions include in any event
the transfer of the business or a substantial part thereof, entering into or terminating a
|
135
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
articles of association need to be amended. Such change of the articles of association requires that a resolution of a general meeting of shareholders is supported by shareholders holding at least two-thirds of votes cast and shares
represented at the meeting.
|
|
long-lasting cooperation agreement with a third party, and the sale or purchase of a company or a stake in a company with a value of
one-third of the assets of the company (according to the most recently adopted annual accounts plus the explanatory notes to that balance sheet).
The Mylan Articles provide that the General Meeting may only adopt certain resolutions upon the recommendation and proposal of the Mylan Board. These
resolutions concern, amongst other items, (a) any amendment to the Mylan Articles; (b) any legal merger of the company; (c) any demerger; or (d) any dissolution of Mylan.
The Mylan Articles provide that the following transactions require approval by at least 75 percent of the votes cast, representing more than half of the issued
share capital, of the General Meeting, unless approved under certain circumstances by the Mylan Board: (i) any legal merger to which Mylan and an interested person are parties, (ii) any legal demerger to which Mylan and an interested person are
parties, (iii) any sale, lease, exchange, or other disposition of all or substantially all of Mylans properties or assets to an interested person, (iv) the adoption of any plan or proposal for Mylans liquidation or dissolution under
which the rights of an interested person differ from those accorded to other holders of Mylan Shares, or (v) any transaction of a character described in (i), (ii),
|
136
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
|
|
(iii), or (iv) involving an affiliate or associate of an interested person or an associate of any such affiliate.
|
|
|
|
Purchase and Repurchase of Shares
|
|
Under the Swedish Companies Act, a company with its shares admitted to trading on a regulated market such as Nasdaq Stockholm may purchase a maximum of ten percent of all outstanding shares in the company, provided that a general
meeting of shareholders has resolved upon this with a qualified majority. A general meeting of shareholders may also resolve upon the redemption of the companys shares. Purchase of the companys shares may only be made if, after the
payment of the purchase or redemption price, there is sufficient coverage for the companys restricted equity and the payment is justified, taking into consideration the equity required for the type of operations, the companys need for
consolidation (which, under the Swedish Companies Act, generally refers to the strength of a companys balance sheet and the companys ability to fulfill its obligations) and liquidity, as well as the companys financial position in
general.
|
|
Under Dutch law, a company may not subscribe for newly issued shares in its own capital. Subject to certain provisions of Dutch law and the
Mylan Articles, Mylan is permitted to acquire fully paid up shares of its own share capital for such consideration as the Mylan Board may determine.
Mylan may repurchase up to $1 billion of Mylan Shares under its current repurchase program that was announced on November 16, 2015, but it is not obligated to
acquire any particular amount of Mylan Shares and the program expires on August 27, 2016.
|
|
|
|
Pre-emptive Rights
|
|
Under the Swedish Companies Act, shareholders have
pre-emptive
rights (Sw.
företrädesrätt
) to subscribe pro rata for newly issued shares as of a certain record date.
Pre-emptive rights to subscribe do not apply with respect to shares issued for consideration other than cash or for shares issued pursuant to convertible debentures or warrants previously granted by the company. The pre-emptive rights to subscribe
for new shares may also be waived by a resolution passed by two-thirds of the votes cast and shares represented at the
|
|
Mylan shareholders have a pre-emptive right with respect to the issuances of Mylan Shares in proportion to the aggregate amount of the Mylan Shares held by such shareholder. Mylan shareholders have no pre-emptive right with respect
to the issuances of Mylan preferred shares. Also, no pre-emptive right exists upon the issue of shares (i) against payment other than in cash, (ii) to employees of Mylan or its affiliates, or (iii) to a party exercising a previously acquired right
to subscribe for shares.
|
137
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
general meeting of shareholders resolving upon the issue.
|
|
Until February 27, 2020, the Mylan Board may restrict or exclude any pre-emptive rights with respect to any share issuance (including any
subscriptions rights thereto). From February 27, 2020, pre-emptive rights may be restricted or excluded with respect to any such share issuance pursuant to a resolution of the General Meeting upon a proposal duly made by the Mylan Board, or pursuant
to a resolution of the Mylan Board if the power and authority to restrict or exclude pre-emptive rights has been delegated to the Mylan Board by the General Meeting for such period (but in any event not to exceed five years) as the General Meeting
may determine. Each such delegation by the General Meeting may be extended from time to time thereby, provided that no extension will result in such delegation exceeding five years, the maximum period permitted by the applicable provision of Dutch
law.
Unless otherwise expressly provided therein, any such delegation by the General
Meeting will be irrevocable. A resolution of the General Meeting to delegate to the Mylan Board the power and authority to restrict or exclude pre-emptive rights can only be adopted pursuant to and in accordance with a proposal duly made by the
Mylan Board.
A resolution of the General Meeting to restrict or exclude pre-emptive
rights or to delegate to the Mylan Board the power and authority to restrict or exclude pre-emptive rights
|
138
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
|
|
generally requires the approval of a majority of the votes cast at the General Meeting. If less than half of the issued share capital is represented at the meeting, the approval of at least two-thirds of the votes cast at the
General Meeting is required.
|
|
|
|
Protective Measures
|
|
Under Swedish law, if, based on information originating from a party who intends to launch a takeover bid in respect of the shares in the company, the board of directors (or the managing director of such Swedish company whose shares
are admitted to trading on a regulated market or a comparable market outside the European Economic Area) has a well-founded reason to believe that such a bid is imminent or that such a bid has been launched, the company shall only be entitled to
take measures which are intended to impair the conditions for the launching or implementation of the bid following a resolution adopted by the general meeting of shareholders. The company may seek alternative bids.
|
|
Under Dutch law, various protective measures are permissible. Mylans governance arrangements include several provisions that may have
the effect of making a takeover more difficult or less attractive, including:
Mylans issuance to a Dutch foundation of a call option to acquire preferred shares
that, if exercised, could discourage, prevent or delay a potential takeover or allow Mylan to further discuss with a potential acquiror its future plans for Mylan as well as to search for strategic alternatives;
requirements that
certain matters, including the amendment of the Mylan Articles may only be brought to the General Meeting for a vote upon a proposal by the Mylan Board; and
subject the appointment of Mylan directors to a binding nomination by Mylans
Board
|
|
|
|
Rights Agreement / Preferred Shares
|
|
Under Swedish law, there is no concept of call options or other rights agreements to be used as protective measures, subject to what is described above (see Protective Measures).
|
|
Dutch law permits a company to issue to a Dutch foundation a call option to acquire preferred shares that, if exercised, could discourage, prevent or delay a potential takeover or allow such company to further discuss with a
potential acquiror its future
|
139
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
|
|
plans for the company as well as to search for strategic alternatives. Mylan has issued a call option to a Dutch foundation, called Stichting
Preferred Shares Mylan (the Foundation), for Mylan preferred shares. The number of preferred shares held by the Foundation is limited so that, after giving effect to the exercise of a call option, it will not exceed the number of issued
Mylan Shares at such time. See below for a description of certain recent actions taken by the Foundation.
The Foundation is an independent entity with its own independent directors and advisers and will determine, in its sole discretion, subject to the limits set
by its governing documents and applicable Dutch law, whether or not to exercise the call option and any resulting voting power. The Foundations governing documents and the call option agreement between Mylan and the Foundation provide that the
call option and the Foundations resulting voting power will be exercised solely to further the Foundations limited, protective purpose. This limited, protective purpose is set forth in the Foundations governing documents, which
state that the Foundation shall safeguard the interests of Mylan, its businesses and its stakeholders from time to time against any influence that might threaten the strategy, mission, independence, continuity and/or identity of Mylan and its
businesses and which are contrary to the interests of Mylan, its businesses and its stakeholders
|
140
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
|
|
from time to time (including shareholders, employees, creditors, customers, suppliers, relevant patient populations and communities in which
Mylan operates). The Foundations limited, protective purpose includes preventing an unsolicited bid for Mylan Shares or changes in the composition of the Mylan Board without the Mylan Board having the opportunity to sufficiently consider the
consequences of and explore alternatives to such bid or changes. The Foundations independent board determines in its sole discretion, acting reasonably and within the limits set by the Foundations governing documents, the call option
agreement and Dutch law (as described further below), whether or not it perceives that such a threat exists and, if so, whether or not it is required to act by exercising the call option and by voting (or not voting) the Mylan preferred shares.
The Foundations conduct is subject to and limited by the fundamental principle of
Dutch law, as developed and re-affirmed in Dutch case law, that any protective measure adopted must be an adequate and proportional response to the perceived threat. Given this fundamental principle of Dutch law and the Foundations governing
documents, the Foundation is (i) permitted to acquire and vote the Mylan preferred shares solely to the extent these actions further its limited, protective purpose and (ii) restricted from exercising any voting power unless it is an adequate and
proportional response to a threat reasonably
|
141
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
|
|
perceived by the Foundation. The Foundation thereby is limited to exercising its voting power to a situation where a party or parties posing
such a threat could actually vote (or control the vote on) Mylan Shares and in an amount not greater than the voting power of the party or parties posing the threat.
The Foundation, as a matter of Dutch law, also would be expected to require Mylan to cancel its preferred shares once the perceived threat to Mylan and its
stakeholders has been removed or sufficiently mitigated or neutralized. Subject to the same limitations described above, the Foundation would continue to have the right to exercise the call option in the future in response to a new threat to the
interests of Mylan, its businesses and its stakeholders from time to time.
On July
23, 2015, in response to Tevas unsolicited expression of interest in acquiring Mylan, the Foundation exercised its call option and acquired 488,388,431 Mylan preferred shares (which represents 100 percent of the class of Mylan preferred shares
as of July 24, 2015) pursuant to the terms of the call option agreement. Each Mylan Share and preferred share is entitled to one vote on each matter properly brought before the extraordinary general meeting. On July 27, 2015, Teva announced its
entry into an agreement to acquire the Generic Drug Unit of Allergan plc and the withdrawal of its unsolicited, non-binding expression of interest to acquire Mylan.
|
142
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
|
|
On September 19, 2015, the Foundation requested the redemption of the Mylan preferred shares issued on July 23, 2015, informing Mylan that it was reasonably convinced that the influences that might adversely affect or threaten
the strategy, mission, independence, continuity and/or identity of Mylan and its business in a manner that is contrary to the interest of Mylan, its business and its stakeholders had been sufficiently addressed. Holders of Mylan Shares approved the
redemption of the Mylan preferred shares on January 7, 2016 at an extraordinary General Meeting. The redemption of the Mylan preferred shares became effective on March 17, 2016. The Foundation will continue to have the right to exercise its call
option in the future in response to a new threat to the interests of Mylan, its businesses and its stakeholders from time to time.
|
|
|
|
Dividends
|
|
Under the Swedish Companies Act, only a resolution at a general meeting of shareholders may authorize the payment of dividends. A resolution to pay dividends may, with some exceptions, not exceed the amount recommended by the board
of directors. Dividends may only be made if, after the payment of the dividend, there is sufficient coverage for the companys restricted equity and the payment of dividends is justified, taking into consideration the equity required for the
type of operations, the companys need for consolidation (which, under the Swedish Companies Act, generally refers to the strength of
|
|
Under Dutch law, distributions may be distributed only to the extent the shareholders equity exceeds the amount of the paid-up and
called-up part of the issued share capital and the reserves that must be maintained under Dutch law or the Mylan Articles. Dividends may be declared after adoption of the annual accounts by the General Meeting upon the recommendation and proposal of
the Mylan Board. The profits as they appear from the annual accounts will be distributed as follows:
First, if Mylan preferred shares are outstanding, a dividend will be
distributed
|
143
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
a companys balance sheet and the companys ability to fulfill its obligations) and liquidity, as well as the companys financial position in general. Each person who is registered as a shareholder in the share
register maintained by Euroclear as of the record date for the dividend determined at the general meeting of shareholders (usually the second business day following the general meeting of shareholders) will be entitled to receive the dividend
distribution. Dividends are normally distributed to the shareholders through the Euroclear system. Where a shareholder cannot be reached through the Euroclear system, the shareholders claim on the company with respect to the dividend amount
will remain in force and shall be limited in time only pursuant to the general Swedish rules regarding a ten-year limitations period for claims. Where any claim is time-barred, the dividend shall inure to the company.
|
|
to the Mylan preferred shares in accordance with the Mylan Articles;
Second, the Mylan
Board will determine which part of the profits remaining after such distribution on the Mylan preferred shares, if applicable, will be reserved; and
Third, to the extent not distributed as a dividend in respect of Mylan preferred shares
and/or reserved as described above, the profits will be available for distribution to holders of Mylan Shares, provided that any such distribution must be authorized by the Mylan Board.
Interim dividends may be declared as provided in the Mylan Articles and may be
distributed to the extent that the shareholders equity exceeds the amount of the paid-up and called-up part of the issued share capital and the required legal reserves as described above as apparent from interim financial statements prepared
in accordance with Dutch law.
|
|
|
|
Squeeze-Out Merger Threshold
|
|
Under the Swedish Companies Act, a shareholder holding more than 90 percent of the shares in a company is entitled to acquire the remaining shares from the other shareholders in the company on a compulsory basis. Correspondingly, a
minority shareholder is also in such situation entitled to demand that the majority shareholder purchase his or her shares.
|
|
Under Dutch law, a shareholder who for his own account contributes at least 95 percent of a companys issued share capital may initiate proceedings against the companys minority shareholders jointly for the transfer of
their shares to the claimant. The proceedings are held before the Enterprise Chamber. The Enterprise Chamber may grant the claim for squeeze-out in relation to all minority shareholders and will determine the price to be
paid
|
144
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
|
|
for the shares, if necessary after appointment of one or three experts who will offer an opinion to the Enterprise Chamber on the value to be paid for the shares of the minority shareholders. Once the order to transfer becomes final
before the Enterprise Chamber, the person acquiring the shares will give written notice of the date and place of payment and the price to the holders of the shares to be acquired whose addresses are known to him. Unless the addresses of all of them
are known to the acquiring person, such person is required to publish the same in a daily newspaper with a national circulation.
|
|
|
|
Appraisal Rights
|
|
There is no concept of appraisal rights under Swedish law. However, as described above (see Squeeze-Out Merger Threshold), shareholders have certain rights in the context of a squeeze-out merger.
|
|
There is no concept of appraisal rights under Dutch law. However, as described above (see Squeeze-Out Merger Threshold),
shareholders have certain rights in the context of a squeeze-out merger.
In addition,
Dutch law provides that, to the extent that the acquiring company in a cross-border merger is organized under the laws of another EU member state, a shareholder of a Dutch disappearing company who has voted against the cross-border merger may file a
claim with the Dutch company for compensation. Such compensation will be determined by one or more independent experts. The shares of such shareholder that are subject to such claim will cease to exist as of the moment of entry into effect of the
cross-border merger.
|
|
|
|
Dissolution/Liquidation
|
|
Under the Swedish Companies Act, it may be resolved at a general meeting of shareholders
|
|
A resolution to dissolve Mylan may be proposed by the Mylan Board and adopted by an
|
145
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
|
|
that a company is to go into voluntary liquidation. A company may also go into compulsory liquidation if the Swedish Companies Registration
Office or a court of general jurisdiction orders the company to go into compulsory liquidation according to the provisions in the Swedish Companies Act. Under the Swedish Companies Act, all shares carry equal rights in a liquidation unless otherwise
provided in the articles of association of the company.
The Meda Articles do not provide for any deviation and thus all shares carry equal rights in a
liquidation.
|
|
absolute majority of the votes cast, in a meeting in which at least one-third of Mylans issued share capital is present or
represented.
If Mylan is dissolved, the assets of Mylan would be used for payment of
debts. After payment of debts and the costs of liquidation, payments are first made to the holders of any outstanding preferred shares in accordance with the procedures set forth in the Mylan Articles and below, and the balance of Mylans
assets would be paid to the holders of Mylan Shares in proportion to the number of Mylan Shares they held.
If Mylan preferred shares are outstanding at the
time of a dissolution, prior to the distribution to the holders of Mylan Shares, an amount will be paid to the holders of Mylan preferred shares equal redemption amounts, increased by: (i) any deficit in the payment of dividend referred to in the
Mylan Articles and (ii) an amount equal to the percentage referred to in the Mylan Articles on the compulsory amount paid on the preferred shares, calculated over the period starting on the first day after the last full financial year for which the
company has adopted annual accounts prior to the liquidation and ending on and including the day of the payment on preferred shares referred to above and any accrued and unpaid dividends with respect to periods prior to such period, with due
observance of the fact that any and all dividends and/or other distributions paid on the preferred shares relating to such periods will be deducted from the payment.
|
146
|
|
|
|
|
|
|
Meda
|
|
Mylan
|
|
|
|
Forum Selection
|
|
Under Swedish law, the forum for civil cases is generally where the board of directors has its registered office.
|
|
Unless Mylan consents in writing to the selection of an alternative forum, the competent courts of Amsterdam, the Netherlands will be the sole and exclusive forum for any action asserting a claim for breach of a duty owed by any
director, officer, or other employee of Mylan (including any former director, former officer, or other former employee of Mylan to the extent such claim arises from such director, officer, or other employees breach of duty while serving as a
director, officer, or employee of Mylan) to Mylan or Mylans shareholders; any action asserting a claim arising pursuant to or otherwise based on any provision of Dutch law or the Mylan Articles; any action asserting a claim that is mandatorily
subject to Dutch law; or to the extent permitted under Dutch law, any derivative action or proceeding brought on behalf of Mylan, in each such case subject to such court having personal jurisdiction over the indispensable parties named as defendants
therein.
|
147
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information gives effect to the acquisition of the EPD Business and the proposed acquisition of Meda pursuant to
the Offer.
For purposes of preparing the unaudited pro forma condensed combined balance sheet at December 31, 2015, Mylan has utilized the following
information:
|
|
|
The audited Mylan consolidated balance sheet as of December 31, 2015;
|
|
|
|
The audited Meda consolidated balance sheet as of December 31, 2015, converted to U.S. GAAP and U.S. Dollars and conformed to Mylans presentation;
|
|
|
|
Pro forma adjustments to reflect the proposed acquisition of Meda as if it had occurred on December 31, 2015; and
|
|
|
|
Financing related adjustments to reflect the proposed acquisition of Meda as if it had occurred on December 31, 2015.
|
For purposes of preparing the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2015, Mylan has utilized the
following information:
|
|
|
The audited Mylan consolidated statement of operations for the year ended December 31, 2015;
|
|
|
|
The audited Meda consolidated income statement for the year ended December 31, 2015, converted to U.S. GAAP and U.S. Dollars and conformed to Mylans presentation;
|
|
|
|
The unaudited EPD Business combined results of operations for the period from January 1, 2015 to February 27, 2015, the acquisition date of the EPD Business;
|
|
|
|
Pro forma adjustments to reflect the acquisition of the EPD Business as if it had occurred on January 1, 2015;
|
|
|
|
Pro forma adjustments to reflect the proposed acquisition of Meda as if it had occurred on January 1, 2015; and
|
|
|
|
Financing related adjustments to reflect the proposed acquisition of Meda as if it had occurred on January 1, 2015.
|
The consolidated financial statements of Mylan and the EPD Business are prepared in accordance with U.S. GAAP with all amounts stated in U.S Dollars. The
consolidated financial statements of Meda are prepared in accordance with IFRS as issued by the IASB with all amounts presented in Swedish kronor. The unaudited pro forma financial information has been prepared in accordance with U.S. GAAP. The
unaudited pro forma financial information gives effect to the acquisition of the EPD Business and the proposed acquisition of Meda, both of which are accounted for under the acquisition method of accounting in accordance with
ASC 805, Business
Combinations
. Under
ASC 805
, although other factors are also relevant, the acquirer is usually the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity. As a result,
Mylan is treated as the acquirer in both transactions.
The historical consolidated financial information has been adjusted to give effect to pro forma
events that are directly attributable to the aforementioned transactions, factually supportable and, with respect to the unaudited pro forma condensed combined statement of operations, expected to have a continuing impact on the results of the
Combined Company. The unaudited pro forma financial information should be read in conjunction with the accompanying notes to the unaudited pro forma financial information. In addition, the unaudited pro forma financial information was based on and
should be read in conjunction with the consolidated financial statements of Mylan for the year ended December 31, 2015 and the related notes thereto incorporated by reference into this prospectus and the consolidated financial statements of
Meda for the year ended December 31, 2015 and the related notes thereto included in this prospectus beginning on page F-1.
148
The acquisition method of accounting, including purchase price adjustments, is dependent upon certain valuations
and other studies that must be prepared as of the completion date of the transaction and is preliminary at this time. Until the transaction is complete, Mylan will not have complete access to all the relevant information. Differences between these
preliminary estimates and the final acquisition accounting may occur and these differences could have a material impact on the unaudited pro forma financial information.
The unaudited pro forma financial information is for illustrative purposes only. It does not purport to indicate the results that would have actually been
attained had the proposed acquisition of Meda or the acquisition of the EPD Business been completed on the assumed dates or for the periods presented, or which may be realized in the future. To produce the unaudited pro forma financial information,
Mylan allocated the estimated purchase price for Meda using its best estimates of fair value. To the extent there are significant changes to the Meda business, the assumptions and estimates herein could change significantly. The allocation of the
purchase price is dependent upon certain valuation and other studies that are not yet started. Accordingly, the pro forma purchase price adjustments are preliminary and subject to further adjustments as additional information becomes available, and
as additional analysis is performed. There can be no assurances that the final valuation will not result in material changes to the purchase price allocation. Furthermore, Mylan could have reorganization and restructuring expenses as well as
potential operating synergies as a result of the proposed combining of Mylan and Meda. The unaudited pro forma financial information does not reflect these potential expenses and synergies.
The unaudited pro forma financial information has been prepared assuming that 100 percent of the outstanding Meda shares will be tendered into the Offer.
149
Mylan N.V.
Unaudited Pro Forma Condensed Combined Balance Sheet
as of December 31, 2015
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
Historical
|
|
|
Pro Forma
|
|
|
Combined
|
|
|
|
Mylan
|
|
|
Meda
|
|
|
Meda
|
|
|
Mylan/Meda
|
|
|
|
USD
|
|
|
SEK
|
|
|
SEK
|
|
|
|
|
|
SEK
|
|
|
USD
|
|
|
USD
|
|
|
|
|
|
USD
|
|
|
|
|
|
USD
|
|
|
|
U.S.
GAAP
|
|
|
IFRS
|
|
|
U.S. GAAP
Adjustments
|
|
|
Note
|
|
|
U.S.
GAAP
|
|
|
U.S.
GAAP
|
|
|
Pro Forma
Adjustments
|
|
|
Note
|
|
|
Financing
Adjustments
|
|
|
Note
|
|
|
Pro Forma
Combined
|
|
|
|
I
|
|
|
II
|
|
|
III
|
|
|
|
|
|
IV = II+III
|
|
|
V
|
|
|
VI
|
|
|
|
|
|
VII
|
|
|
|
|
|
VIII=I+V+VI+VII
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,236.0
|
|
|
|
1,612.0
|
|
|
|
|
|
|
|
|
|
|
|
1,612.0
|
|
|
$
|
191.0
|
|
|
$
|
(5,942.7
|
)
|
|
|
4a
|
|
|
$
|
6,000.0
|
|
|
|
7a
|
|
|
$
|
1,169.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(107.0
|
)
|
|
|
4c
|
|
|
|
(208.0
|
)
|
|
|
7a
|
|
|
|
|
|
Accounts receivable, net
|
|
|
2,689.1
|
|
|
|
4,615.0
|
|
|
|
|
|
|
|
|
|
|
|
4,615.0
|
|
|
|
546.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,235.8
|
|
Inventories
|
|
|
1,951.0
|
|
|
|
2,876.0
|
|
|
|
|
|
|
|
|
|
|
|
2,876.0
|
|
|
|
340.7
|
|
|
|
103.0
|
|
|
|
4d
|
|
|
|
|
|
|
|
|
|
|
|
2,394.7
|
|
Prepaid expenses and other current assets
|
|
|
596.6
|
|
|
|
664.0
|
|
|
|
335.2
|
|
|
|
8b
|
|
|
|
999.2
|
|
|
|
118.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
715.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
6,472.7
|
|
|
|
9,767.0
|
|
|
|
335.2
|
|
|
|
|
|
|
|
10,102.2
|
|
|
|
1,196.8
|
|
|
|
(5,946.7
|
)
|
|
|
|
|
|
|
5,792.0
|
|
|
|
|
|
|
|
7,514.8
|
|
Property, plant and equipment, net
|
|
|
1,983.9
|
|
|
|
1,589.0
|
|
|
|
|
|
|
|
|
|
|
|
1,589.0
|
|
|
|
188.2
|
|
|
|
|
|
|
|
4e
|
|
|
|
|
|
|
|
|
|
|
|
2,172.1
|
|
Intangible assets, net
|
|
|
7,221.9
|
|
|
|
21,869.0
|
|
|
|
|
|
|
|
|
|
|
|
21,869.0
|
|
|
|
2,590.7
|
|
|
|
8,500.0
|
|
|
|
4f
|
|
|
|
|
|
|
|
|
|
|
|
15,721.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,590.7
|
)
|
|
|
4f
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
5,380.1
|
|
|
|
25,524.0
|
|
|
|
|
|
|
|
|
|
|
|
25,524.0
|
|
|
|
3,023.7
|
|
|
|
2,983.3
|
|
|
|
4h
|
|
|
|
|
|
|
|
|
|
|
|
8,363.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,023.7
|
)
|
|
|
4h
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax benefit
|
|
|
457.6
|
|
|
|
1,812.0
|
|
|
|
(368.3
|
)
|
|
|
8b
|
|
|
|
1,443.7
|
|
|
|
171.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
628.6
|
|
Other assets
|
|
|
751.5
|
|
|
|
285.0
|
|
|
|
|
|
|
|
|
|
|
|
285.0
|
|
|
|
33.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
785.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
22,267.7
|
|
|
|
60,846.0
|
|
|
|
(33.1
|
)
|
|
|
|
|
|
|
60,812.9
|
|
|
$
|
7,204.2
|
|
|
$
|
(77.8
|
)
|
|
|
|
|
|
$
|
5,792.0
|
|
|
|
|
|
|
$
|
35,186.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payable
|
|
$
|
1,109.6
|
|
|
|
1,696.0
|
|
|
|
|
|
|
|
|
|
|
|
1,696.0
|
|
|
$
|
200.9
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
1,310.5
|
|
Short-term borrowings
|
|
|
1.3
|
|
|
|
1,332.0
|
|
|
|
|
|
|
|
|
|
|
|
1,332.0
|
|
|
|
157.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
159.1
|
|
Income taxes payable
|
|
|
92.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92.4
|
|
Current portion of long-term debt and other long-term obligations
|
|
|
1,077.0
|
|
|
|
1,023.0
|
|
|
|
|
|
|
|
|
|
|
|
1,023.0
|
|
|
|
121.2
|
|
|
|
|
|
|
|
|
|
|
|
6,000.0
|
|
|
|
7a
|
|
|
|
7,198.2
|
|
Other current liabilities
|
|
|
1,841.9
|
|
|
|
3,521.0
|
|
|
|
|
|
|
|
|
|
|
|
3,521.0
|
|
|
|
417.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,259.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
4,122.2
|
|
|
|
7,572.0
|
|
|
|
|
|
|
|
|
|
|
|
7,572.0
|
|
|
|
897.0
|
|
|
|
|
|
|
|
|
|
|
|
6,000.0
|
|
|
|
|
|
|
|
11,019.2
|
|
Long-term debt
|
|
|
6,295.6
|
|
|
|
22,507.0
|
|
|
|
|
|
|
|
|
|
|
|
22,507.0
|
|
|
|
2,666.3
|
|
|
|
(2.8
|
)
|
|
|
4i
|
|
|
|
|
|
|
|
|
|
|
|
8,959.1
|
|
Other long-term obligations
|
|
|
1,366.0
|
|
|
|
5,103.0
|
|
|
|
|
|
|
|
|
|
|
|
5,103.0
|
|
|
|
604.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,970.5
|
|
Deferred income tax liability
|
|
|
718.1
|
|
|
|
4,708.0
|
|
|
|
|
|
|
|
|
|
|
|
4,708.0
|
|
|
|
557.7
|
|
|
|
1,203.0
|
|
|
|
4g
|
|
|
|
|
|
|
|
|
|
|
|
2,478.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
12,501.9
|
|
|
|
39,890.0
|
|
|
|
|
|
|
|
|
|
|
|
39,890.0
|
|
|
|
4,725.5
|
|
|
|
1,200.2
|
|
|
|
|
|
|
|
6,000.0
|
|
|
|
|
|
|
|
24,427.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares
|
|
|
5.5
|
|
|
|
365.0
|
|
|
|
|
|
|
|
|
|
|
|
365.0
|
|
|
|
43.2
|
|
|
|
(43.2
|
)
|
|
|
4b
|
|
|
|
|
|
|
|
|
|
|
|
5.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
|
|
4a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
7,128.6
|
|
|
|
13,788.0
|
|
|
|
|
|
|
|
|
|
|
|
13,788.0
|
|
|
|
1,633.4
|
|
|
|
(1,633.4
|
)
|
|
|
4b
|
|
|
|
|
|
|
|
|
|
|
|
8,436.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,307.4
|
|
|
|
4a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings
|
|
|
4,462.1
|
|
|
|
6,431.0
|
|
|
|
(33.1
|
)
|
|
|
8b
|
|
|
|
6,397.9
|
|
|
|
757.9
|
|
|
|
(757.9
|
)
|
|
|
4b
|
|
|
|
(208.0
|
)
|
|
|
7a
|
|
|
|
4,147.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(107.0
|
)
|
|
|
4c
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive (loss) income
|
|
|
(1,764.3
|
)
|
|
|
375.0
|
|
|
|
|
|
|
|
|
|
|
|
375.0
|
|
|
|
44.6
|
|
|
|
(44.6
|
)
|
|
|
4b
|
|
|
|
|
|
|
|
|
|
|
|
(1,764.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,831.9
|
|
|
|
20,959.0
|
|
|
|
(33.1
|
)
|
|
|
|
|
|
|
20,925.9
|
|
|
|
2,479.1
|
|
|
|
(1,278.4
|
)
|
|
|
|
|
|
|
(208.0
|
)
|
|
|
|
|
|
|
10,824.6
|
|
Noncontrolling interest
|
|
|
1.4
|
|
|
|
(3.0
|
)
|
|
|
|
|
|
|
|
|
|
|
(3.0
|
)
|
|
|
(0.4
|
)
|
|
|
0.4
|
|
|
|
4b
|
|
|
|
|
|
|
|
|
|
|
|
1.4
|
|
Less: Treasury Stock
|
|
|
67.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
9,765.8
|
|
|
|
20,956.0
|
|
|
|
(33.1
|
)
|
|
|
|
|
|
|
20,922.9
|
|
|
|
2,478.7
|
|
|
|
(1,278.0
|
)
|
|
|
|
|
|
|
(208.0
|
)
|
|
|
|
|
|
|
10,758.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
22,267.7
|
|
|
|
60,846.0
|
|
|
|
(33.1
|
)
|
|
|
|
|
|
|
60,812.9
|
|
|
$
|
7,204.2
|
|
|
$
|
(77.8
|
)
|
|
|
|
|
|
$
|
5,792.0
|
|
|
|
|
|
|
$
|
35,186.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150
Mylan N.V.
Unaudited Pro Forma Condensed Combined Statement of Operations
for the Year Ended December 31, 2015
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
Pro Forma
|
|
|
Historical
|
|
|
Pro Forma
|
|
|
Combined
|
|
|
|
Mylan
|
|
|
EPD
Business
Jan. 1,
2015
Feb. 27,
2015
|
|
|
EPD
Business
Pro Forma
Adjustments
|
|
|
|
|
|
Mylan Pro
Forma for
EPD
Business
|
|
|
Meda
|
|
|
Meda
|
|
|
Mylan/Meda
|
|
|
|
USD
|
|
|
USD
|
|
|
USD
|
|
|
|
|
|
USD
|
|
|
SEK
|
|
|
SEK
|
|
|
|
|
SEK
|
|
|
USD
|
|
|
USD
|
|
|
|
|
|
USD
|
|
|
|
|
|
USD
|
|
|
|
U.S.
GAAP
|
|
|
U.S.
GAAP
|
|
|
U.S.
GAAP
|
|
|
Note
|
|
|
U.S.
GAAP
|
|
|
IFRS
|
|
|
U.S. GAAP
Adjustments
|
|
|
Note
|
|
U.S. GAAP
|
|
|
U.S.
GAAP
|
|
|
Pro Forma
Adjustments
|
|
|
Note
|
|
|
Financing
Adjustments
|
|
|
Note
|
|
|
Pro Forma
Combined
|
|
|
|
I
|
|
|
II
|
|
|
III
|
|
|
|
|
|
IV=I+II+III
|
|
|
V
|
|
|
VI
|
|
|
|
|
VII = V+VI
|
|
|
VIII
|
|
|
IX
|
|
|
|
|
|
X
|
|
|
|
|
|
XI=IV+VIII+IX+X
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
9,362.6
|
|
|
$
|
247.0
|
|
|
$
|
|
|
|
|
|
|
|
$
|
9,609.6
|
|
|
|
18,888.0
|
|
|
|
|
|
|
|
|
|
18,888.0
|
|
|
$
|
2,239.8
|
|
|
$
|
(42.8
|
)
|
|
|
6a
|
|
|
$
|
|
|
|
|
|
|
|
$
|
11,806.6
|
|
Other revenues
|
|
|
66.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66.7
|
|
|
|
478.0
|
|
|
|
|
|
|
|
|
|
478.0
|
|
|
|
56.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
9,429.3
|
|
|
|
247.0
|
|
|
|
|
|
|
|
|
|
|
|
9,676.3
|
|
|
|
19,366.0
|
|
|
|
|
|
|
|
|
|
19,366.0
|
|
|
|
2,296.5
|
|
|
|
(42.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,930.0
|
|
Cost of sales
|
|
|
5,213.2
|
|
|
|
90.3
|
|
|
|
62.3
|
|
|
|
5a
|
|
|
|
5,365.9
|
|
|
|
10,331.8
|
|
|
|
|
|
|
|
|
|
10,331.8
|
|
|
|
1,225.2
|
|
|
|
64.9
|
|
|
|
6b
|
|
|
|
|
|
|
|
|
|
|
|
6,716.2
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
|
5c
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103.0
|
|
|
|
6c
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(42.8
|
)
|
|
|
6a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
4,216.1
|
|
|
|
156.7
|
|
|
|
(62.4
|
)
|
|
|
|
|
|
|
4,310.4
|
|
|
|
9,034.2
|
|
|
|
|
|
|
|
|
|
9,034.2
|
|
|
|
1,071.3
|
|
|
|
(167.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,213.8
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
671.9
|
|
|
|
15.6
|
|
|
|
|
|
|
|
|
|
|
|
687.5
|
|
|
|
207.0
|
|
|
|
|
|
|
|
|
|
207.0
|
|
|
|
24.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
712.0
|
|
Selling, general, and administrative
|
|
|
2,180.7
|
|
|
|
93.4
|
|
|
|
(86.1
|
)
|
|
|
5b
|
|
|
|
2,188.1
|
|
|
|
6,019.5
|
|
|
|
5.1
|
|
|
8a
|
|
|
6,024.6
|
|
|
|
714.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,902.5
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
|
5c
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation settlements, net
|
|
|
(97.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(97.4
|
)
|
|
|
210.0
|
|
|
|
|
|
|
|
|
|
210.0
|
|
|
|
24.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(72.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
2,755.2
|
|
|
|
109.0
|
|
|
|
(86.0
|
)
|
|
|
|
|
|
|
2,778.2
|
|
|
|
6,436.5
|
|
|
|
5.1
|
|
|
|
|
|
6,441.6
|
|
|
|
763.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,542.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations
|
|
|
1,460.9
|
|
|
|
47.7
|
|
|
|
23.6
|
|
|
|
|
|
|
|
1,532.2
|
|
|
|
2,597.7
|
|
|
|
(5.1
|
)
|
|
|
|
|
2,592.6
|
|
|
|
307.5
|
|
|
|
(167.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,671.8
|
|
Interest expense
|
|
|
339.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
339.4
|
|
|
|
1,067.0
|
|
|
|
|
|
|
|
|
|
1,067.0
|
|
|
|
126.5
|
|
|
|
0.9
|
|
|
|
6d
|
|
|
|
153.3
|
|
|
|
7a
|
|
|
|
620.1
|
|
Other expense, net
|
|
|
206.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206.1
|
|
|
|
269.0
|
|
|
|
|
|
|
|
|
|
269.0
|
|
|
|
31.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
238.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes and noncontrolling interest
|
|
|
915.4
|
|
|
|
47.7
|
|
|
|
23.6
|
|
|
|
|
|
|
|
986.7
|
|
|
|
1,261.7
|
|
|
|
(5.1
|
)
|
|
8a
|
|
|
1,256.6
|
|
|
|
149.1
|
|
|
|
(168.8
|
)
|
|
|
|
|
|
|
(153.3
|
)
|
|
|
|
|
|
|
813.7
|
|
Income tax (benefit) provision
|
|
|
67.7
|
|
|
|
8.7
|
|
|
|
3.7
|
|
|
|
5d
|
|
|
|
80.1
|
|
|
|
112.0
|
|
|
|
32.1
|
|
|
8a, 8b
|
|
|
144.1
|
|
|
|
17.1
|
|
|
|
(33.8
|
)
|
|
|
6e
|
|
|
|
(30.7
|
)
|
|
|
7b
|
|
|
|
32.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
847.7
|
|
|
|
39.0
|
|
|
|
19.9
|
|
|
|
|
|
|
|
906.6
|
|
|
|
1,149.7
|
|
|
|
(37.2
|
)
|
|
|
|
|
1,112.5
|
|
|
|
132.0
|
|
|
|
(135.0
|
)
|
|
|
|
|
|
|
(122.6
|
)
|
|
|
|
|
|
|
781.0
|
|
Net earnings attributable to the noncontrolling interest
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to Mylan N.V. ordinary shareholders
|
|
$
|
847.6
|
|
|
$
|
39.0
|
|
|
$
|
19.9
|
|
|
|
|
|
|
$
|
906.5
|
|
|
|
1,149.7
|
|
|
|
(37.2
|
)
|
|
|
|
|
1,112.5
|
|
|
$
|
132.0
|
|
|
$
|
(135.0
|
)
|
|
|
|
|
|
$
|
(122.6
|
)
|
|
|
|
|
|
$
|
780.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share attributable to Mylan N.V. ordinary shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
1.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average ordinary shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
472.2
|
|
|
|
|
|
|
|
18.3
|
|
|
|
5e
|
|
|
|
490.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28.2
|
|
|
|
6f
|
|
|
|
|
|
|
|
|
|
|
|
518.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
497.4
|
|
|
|
|
|
|
|
18.3
|
|
|
|
5e
|
|
|
|
515.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28.2
|
|
|
|
6f
|
|
|
|
|
|
|
|
|
|
|
|
543.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151
Notes to Unaudited Pro Forma Financial Information
1. General
On February 10, 2016, Mylan issued an
offer announcement under the Swedish Takeover Rules setting forth a public offer to the shareholders of Meda to acquire all of the outstanding shares of Meda, with an enterprise value, including the net debt of Meda, of approximately 83.6kr billion
or $9.9 billion at the announcement date (based on the Announcement Exchange Rate). The Mylan Board has unanimously approved the Offer and the Meda Board has recommended that Meda shareholders accept the Offer. In addition, the two largest Meda
shareholders, together holding approximately 30 percent of the outstanding Meda shares, have irrevocably undertaken to tender their Meda shares into the Offer, subject to limited exceptions. Under the terms of the Offer, Mylan is offering each Meda
shareholder total per share consideration of between 152kr and 165kr (based on the Announcement Exchange Rate) consisting of a combination of cash and Mylan Shares. A calculation will be performed prior to the closing of the Offer to calculate the
number of Mylan Shares to be received by the Meda shareholders. The composition of the Offer consideration is subject to adjustment in certain circumstances. The Offer is fully financed and not conditional on further due diligence. The Offer is
subject to certain closing conditions customary for an offer governed by the Swedish Takeover Rules, including holders of more than 90 percent of the outstanding Meda shares tendering their shares into the Offer and receipt of all necessary
regulatory, governmental or similar clearances, approvals and decisions, including from competition authorities.
On February 27, 2015, Mylan
completed the acquisition of the EPD Business from Abbott in an all-stock transaction for total consideration of $6.3 billion. Also on February 27, 2015, Moon of PA Inc. merged with and into Mylan Inc., with Mylan Inc. surviving as a wholly
owned indirect subsidiary of Mylan and each share of Mylan Inc. common stock issued and outstanding immediately prior to the effective date of the Merger was canceled and automatically converted into, and became the right to receive, one Mylan
Share. On February 18, 2015, the Office of Chief Counsel of the Division of Corporation Finance of the SEC issued a no-action letter to Mylan Inc. and Mylan that included its views that the EPD Transaction constituted a succession
for purposes of Rule 12g-3(a) under the Exchange Act.
The unaudited pro forma financial information gives effect to the acquisition of the EPD Business
and the proposed acquisition of Meda, both of which are accounted for under the acquisition method of accounting in accordance with
ASC 805, Business Combinations
. Under
ASC 805
, although other factors are also relevant, the acquirer
is usually the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity. As a result, Mylan is treated as the acquirer in both transactions.
The historical financial information has been adjusted in the unaudited pro forma financial information to give effect to pro forma events that are: directly
attributable to the acquisition of the EPD Business and the proposed acquisition of Meda; factually supportable; and, with respect to the unaudited pro forma condensed combined statement of operations, expected to have a continuing impact on the
results of the Combined Company. As such, the impact from transaction-related expenses is not included in the unaudited pro forma condensed combined statement of operations. However, the impact of these expenses is reflected in the unaudited pro
forma condensed combined balance sheet as a decrease to cash and cash equivalents with a corresponding decrease to retained earnings. The unaudited pro forma financial information does not reflect any expected synergies, including potential cost
savings, or the associated costs to achieve such synergies that could result from either transaction.
Assumptions and estimates underlying the pro forma
adjustments are described in the following notes. The unaudited pro forma financial information has been prepared based on preliminary estimates, which are subject to change pending further review of the assets acquired and liabilities assumed and
the final purchase price and the allocation thereof. Differences from the preliminary estimates could be material.
The unaudited pro forma financial
information has been presented for illustrative purposes only and is not necessarily indicative of the actual results of operations or financial condition that would have been achieved had either transaction been consummated on the dates indicated
above, or the future consolidated results of operations or financial condition of Mylan or the Combined Company.
152
2. Basis of Presentation
The unaudited pro forma financial information should be read in conjunction with the consolidated financial statements of Mylan for the year ended
December 31, 2015 and the related notes thereto incorporated by reference into this prospectus and the consolidated financial statements of Meda for the year ended December 31, 2015 and the related notes thereto included in this prospectus
beginning on page F-1.
The following discussion details the process and assumptions, including those related to recent acquisitions, that Mylan has made
in preparing the unaudited pro forma financial information.
The consolidated financial statements of Mylan and the EPD Business are prepared in
accordance with U.S. GAAP with all amounts presented in USD. The consolidated financial statements of Meda are prepared in accordance with IFRS as issued by the IASB with all amounts presented in SEK.
The unaudited pro forma financial information has been presented in USD, which is Mylans functional and reporting currency. Medas historical
financial information is translated based on the exchanges rates as quoted by Bloomberg using the following rates:
|
|
|
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2015 was translated using the average exchange rate for the year of 8.4329 SEK per USD;
|
|
|
|
The unaudited pro forma condensed combined balance sheet was translated at the closing rate of 8.4412 SEK per USD as of December 31, 2015.
|
The unaudited pro forma financial information has been prepared using the acquisition method of accounting in accordance with
ASC 805, Business
Combinations
. For accounting purposes, Mylan was treated as the acquirer in the acquisition of the EPD Business and will be treated as the acquirer for the proposed acquisition of Meda. In addition, the unaudited pro forma financial information
has been prepared assuming that 100 percent of the outstanding Meda shares will be tendered into the Offer. Acquisition accounting is dependent upon certain valuations and other studies that have yet to progress to a stage where there is sufficient
information for a definitive measurement. Accordingly, the pro forma adjustments included herein are preliminary, have been presented solely for the purpose of providing the unaudited pro forma financial information and will be revised as additional
information becomes available and as additional analysis is performed. The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of judgment in determining the appropriate assumptions
and estimates. Differences between preliminary estimates in the unaudited pro forma financial information and the final acquisition accounting may occur and could have a material impact on the unaudited pro forma financial information and
Mylans or the Combined Companys future consolidated results of operations and financial condition.
The proposed acquisition of Meda has been
accounted for using Mylans historical information and accounting policies and combining the assets and liabilities of Meda at their respective estimated fair values. The assets and liabilities of Meda have been measured based on various
estimates using assumptions that Mylans management believes are reasonable and utilizing information currently available. To the extent there are significant changes to the Meda business, the assumptions and estimates herein could change
significantly. The allocation of the purchase price is dependent upon certain valuation and other studies that have not been completed. Accordingly, the pro forma purchase price adjustments are preliminary and subject to further adjustments as
additional information becomes available, and as additional analysis is performed. There can be no assurances that the final valuation will not result in material changes to the purchase price allocation.
Acquisition-related transaction costs, such as investment banker, advisory, legal, valuation, and other professional fees, are not included as a component of
consideration transferred but are expensed as incurred. These costs are not presented in the unaudited pro forma condensed combined statement of operations because they will not have a continuing impact on the consolidated results of operations of
the Combined Company.
153
In connection with the proposed acquisition of Meda, total acquisition-related transaction costs (excluding
Mylans financing fees payable related to the Bridge Credit Agreement) expected to be incurred by Mylan are estimated to be approximately $75 million. Total acquisition-related costs expected to be incurred by Meda are estimated to be
approximately $32 million.
In connection with the acquisition of the EPD Business, during the year ended December 31, 2015, transaction costs
incurred by Mylan totaled $86.1 million. These costs are included in the consolidated results of operations and eliminated through adjustments to the unaudited pro forma condensed combined statement of operations. There will be no continuing impact
of these transaction costs on the consolidated results of operations of the Combined Company, and, as such, these fees are not included in the unaudited pro forma condensed combined statement of operations.
Reclassifications and Euromed Adjustment
Certain
reclassifications, as detailed below, were made to the consolidated financial statements of Meda to conform to Mylans financial statement presentation. Reclassification adjustments have been included in the reported balances noted in
Medas historical consolidated balance sheet (located in column II) and income statement (located in column V) as of and for the year ended December 31, 2015.
|
|
|
|
|
|
|
(in millions, SEK)
|
|
|
|
|
|
Presentation in Medas IFRS Financial Statements
|
|
Amount
|
|
|
Presentation in Unaudited Pro Forma Condensed
Combined
Balance Sheet
|
Current Assets
|
|
|
|
|
|
|
Derivatives
|
|
|
149
|
|
|
Prepaid expenses and other current assets
|
Prepayments and accrued income
|
|
|
290
|
|
|
Prepaid expenses and other current assets
|
Tax assets
|
|
|
225
|
|
|
Prepaid expenses and other current assets
|
|
|
|
|
|
|
|
|
|
|
664
|
|
|
|
|
|
|
|
|
|
|
Other receivables
|
|
|
320
|
|
|
Accounts receivable, net
|
Non-current Assets
|
|
|
|
|
|
|
Intangible assets
|
|
|
85
|
|
|
Property, plant and equipment, net
|
|
|
|
Intangible assets
|
|
|
25,524
|
|
|
Goodwill
|
|
|
|
Available-for-sale financial assets
|
|
|
23
|
|
|
Other assets
|
Other non-current receivables
|
|
|
262
|
|
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, SEK)
|
|
|
|
|
|
Presentation in Medas IFRS Financial Statements
|
|
Amount
|
|
|
Presentation in Unaudited Pro Forma Condensed
Combined
Balance Sheet
|
Current Liabilities
|
|
|
|
|
|
|
Accruals and deferred income
|
|
|
1,553
|
|
|
Other current liabilities
|
Derivatives
|
|
|
205
|
|
|
Other current liabilities
|
Other provisions
|
|
|
1,008
|
|
|
Other current liabilities
|
|
|
|
|
|
|
|
|
|
|
2,766
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
1,332
|
|
|
Short-term borrowings
|
|
|
|
Borrowings
|
|
|
1,023
|
|
|
Current portion of long-term debt and other long-term obligations
|
Non-current Liabilities
|
|
|
|
|
|
|
Borrowings
|
|
|
22,507
|
|
|
Long-term debt
|
|
|
|
Derivatives
|
|
|
19
|
|
|
Other long-term obligations
|
Pension obligations
|
|
|
2,273
|
|
|
Other long-term obligations
|
Other provisions
|
|
|
337
|
|
|
Other long-term obligations
|
|
|
|
|
|
|
|
|
|
|
2,629
|
|
|
|
|
|
|
|
|
|
|
154
|
|
|
|
|
|
|
(in millions, SEK)
|
|
|
|
|
|
Presentation in Medas IFRS Financial Statements
|
|
Amount
|
|
|
Presentation in Unaudited Pro Forma Condensed
Combined
Statement of Operations
|
Net sales
|
|
|
478
|
|
|
Other revenues
|
|
|
|
Medicine and business development expenses
|
|
|
3,040
|
|
|
Cost of sales
|
|
|
|
Medicine and business development expenses
|
|
|
207
|
|
|
Research and development
|
|
|
|
Medicine and business development expenses
|
|
|
629
|
|
|
Selling, general and administrative
|
Finance costs
|
|
|
57
|
|
|
Selling, general and administrative
|
|
|
|
|
|
|
|
|
|
|
686
|
|
|
|
|
|
|
|
|
|
|
Medicine and business development expenses
|
|
|
210
|
|
|
Litigation settlements, net
|
|
|
|
Finance costs
|
|
|
1,067
|
|
|
Interest expense
|
|
|
|
Other income
|
|
|
(22
|
)
|
|
Other expense (income) net
|
Finance income
|
|
|
(37
|
)
|
|
Other expense (income) net
|
Finance costs
|
|
|
328
|
|
|
Other expense (income) net
|
|
|
|
|
|
|
|
|
|
|
269
|
|
|
|
|
|
|
|
|
|
|
Upon consummation of the proposed acquisition of Meda, Mylan will review, in detail, Medas accounting policies. As a
result of that review, Mylan may identify differences between the accounting policies of the two companies that, when conformed, could have a material impact on the consolidated financial statements of the Combined Company. At this time, Mylan is
not aware of any significant accounting policy changes. Refer to Note 8 for details regarding the IFRS to U.S. GAAP adjustments.
Disposition of
Euromed
On December 29, 2015, Meda divested the Euromed manufacturing unit in Spain for approximately EUR 82 million. The following table
represents the elimination of sales, cost of sales and operating expenses related to the divestment of Euromed.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, SEK)
|
|
As Reported
(1)
|
|
|
Disposition of
Euromed Adjustment
|
|
|
Adjusted Amounts
(2)
|
|
Net sales
|
|
|
19,170.0
|
|
|
|
282.0
|
|
|
|
18,888.0
|
|
Cost of sales
|
|
|
10,565.0
|
|
|
|
233.2
|
|
|
|
10,331.8
|
|
Selling, general, and administrative
|
|
|
6,026.0
|
|
|
|
6.5
|
|
|
|
6,019.5
|
|
(1)
|
Includes reclassification adjustments to conform Medas historical consolidated income statement (located in column V) for the year ended December 31, 2015 to Mylans presentation.
|
(2)
|
Euromed adjustments have been included in the reported balances noted in Medas historical consolidated income statement (located in column V) for the year ended December 31, 2015.
|
3. Meda Purchase Price
Upon consummation of the proposed
acquisition of Meda, Meda shareholders will receive a combination of cash and Mylan Shares. Subject to the adjustment to the composition of the Offer consideration, Mylan is offering each Meda shareholder:
|
|
|
in respect of 80 percent of the number of Meda shares tendered by such shareholder, 165kr in cash per Meda share; and
|
|
|
|
in respect of the remaining 20 percent of the number of Meda shares tendered by such shareholder:
|
|
i)
|
if the Offeror Average Closing Price is greater than $50.74, a number of Mylan Shares per Meda share equal to 165kr divided by the Offeror Average Closing Price as converted from USD to SEK at the Announcement Exchange
Rate;
|
155
|
ii)
|
if the Offeror Average Closing Price is greater than $30.78 and less than or equal to $50.74, 0.386 Mylan Shares per Meda share; or
|
|
iii)
|
if the Offeror Average Closing Price is less than or equal to $30.78, a number of Mylan Shares per Meda share equal to 100kr divided by the Offeror Average Closing Price as converted from USD to SEK at the Announcement
Exchange Rate.
|
For purposes of determining the number of Mylan Shares that will be delivered in respect of 20 percent of the number of Meda
shares tendered by each Meda shareholder, it is assumed that the Offeror Average Closing Price will be equal to $46.06, the Offeror Average Closing Price if the Offer had been declared unconditional on March 31, 2016. Because $46.06 is greater
than $30.78 and less than or equal to $50.74, each Meda shareholder would receive, in respect of 20 percent of the number of Meda shares tendered by such Meda shareholder, 0.386 Mylan Shares per Meda share.
The cash consideration that will be paid in respect of 80 percent of the number of Meda shares tendered by each Meda shareholder is fixed at 165kr per
Meda share, converted to USD using a SEK/USD exchange rate from March 31, 2016 of 8.1178 (as quoted by Bloomberg).
|
|
|
|
|
Total estimated Meda shares to be
acquired
(a)
|
|
|
365,467,371
|
|
Equity exchange ratio
(b)
|
|
|
0.386
|
|
Equity portion of the Offer
consideration
(c)
|
|
|
20
|
%
|
|
|
|
|
|
Number of Mylan Shares to be issued to Meda shareholders
(d)=(a)*(b)*(c)
|
|
|
28,214,081
|
|
|
|
|
|
|
Multiplied by the Mylan Share closing priceMarch 31, 2016
(e)
|
|
$
|
46.35
|
|
|
|
|
|
|
Estimated fair value of Mylan Shares transferred
(in millions)
(f)=(d)*(e)
|
|
$
|
1,307.7
|
|
|
|
|
|
|
Cash consideration per Meda share to be
acquired
(g)
|
|
$
|
20.33
|
|
Cash portion of the Offer
consideration
(h)
|
|
|
80
|
%
|
|
|
|
|
|
Estimated cash consideration
(in
millions)
(i)=(a)*(g)*(h)
|
|
$
|
5,942.7
|
|
|
|
|
|
|
Fair value of total consideration transferred
(in millions)
(j)=(f)+(i)
|
|
$
|
7,250.4
|
|
|
|
|
|
|
Goodwill
(in millions)
|
|
$
|
2,983.3
|
|
|
|
|
|
|
4. Meda Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments
The unaudited pro forma financial information has been prepared using the consolidated financial statements of Mylan for the year ended December 31, 2015
and the related notes thereto incorporated by reference into this prospectus, as well as certain assumptions made by Mylan. Adjustments included in the unaudited pro forma condensed combined balance sheet are represented by the following:
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
Amount
|
|
(in millions)
|
|
|
|
|
|
|
Purchase consideration
|
|
|
|
|
|
|
|
|
Fair value of total consideration transferred
|
|
|
3
|
|
|
$
|
7,250.4
|
|
Recognized amounts of identifiable assets acquired and liabilities assumed
|
|
|
|
|
|
|
|
|
Book value of Medas net assets
|
|
|
4b
|
|
|
|
2,478.7
|
|
Elimination of Medas historical goodwill
|
|
|
4h
|
|
|
|
(3,023.7
|
)
|
|
|
|
|
|
|
|
|
|
Net liabilities to be assumed
|
|
|
|
|
|
|
(545.0
|
)
|
Preliminary estimate of fair value adjustment of net assets acquired
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
4d
|
|
|
|
103.0
|
|
Intangible assets, net
|
|
|
4f
|
|
|
|
5,909.3
|
|
Long-term debt
|
|
|
4i
|
|
|
|
2.8
|
|
Deferred income tax liability
|
|
|
4g
|
|
|
|
(1,203.0
|
)
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
4h
|
|
|
$
|
2,983.3
|
|
|
|
|
|
|
|
|
|
|
156
a.
|
The table below depicts a sensitivity analysis of the estimated purchase consideration and goodwill, assuming a 10 percent increase or decrease of the closing price per Mylan Share on NASDAQ on March 31, 2016 used
to determine the total estimated purchase consideration.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price per
Mylan Share
|
|
|
Shares
Exchanged
(in millions)
|
|
|
Calculated
Value of
Share
Consideration
(in millions)
|
|
|
Cash
Consideration
Transferred
(in millions)
|
|
|
Total
Purchase
Consideration
(in millions)
|
|
|
Total Goodwill
(in millions)
|
|
Mylan Share closing priceMarch 31, 2016
|
|
$
|
46.35
|
|
|
|
28.2
|
|
|
$
|
1,307.7
|
|
|
$
|
5,942.7
|
|
|
$
|
7,250.4
|
|
|
$
|
2,983.3
|
|
Decrease of 10%
|
|
|
41.72
|
|
|
|
28.2
|
|
|
|
1,177.0
|
|
|
|
5,942.7
|
|
|
|
7,119.7
|
|
|
|
2,852.6
|
|
Increase of 10%
|
|
|
50.99
|
|
|
|
28.2
|
|
|
|
1,438.6
|
|
|
|
5,942.7
|
|
|
|
7,381.3
|
|
|
|
3,114.2
|
|
b.
|
Reflects the elimination of Medas shareholders equity as of December 31, 2015.
|
c.
|
Reflects the recognition of approximately $107 million in total transaction costs (excluding Mylans financing fees payable related to the Bridge Credit Agreement) expected to be incurred. Of that total,
approximately $75 million of transaction costs are expected to be incurred by Mylan and approximately $32 million are expected to be incurred by Meda. All of the transaction costs are expected to be incurred through the consummation of the
transaction. These fees have been recorded as a reduction to cash and retained earnings solely for the purposes of this presentation. There will be no continuing impact of these transaction costs on the consolidated results of operations of the
Combined Company and, as such, these fees are not included in the unaudited pro forma condensed combined statement of operations.
|
d.
|
Represents the estimated adjustment of approximately $103.0 million to step-up inventory to fair value. The estimated step-up in inventory is preliminary and is subject to change based upon the final determination of
the fair values of finished goods and work-in-process inventories. Mylan will reflect the fair value adjustment of the inventory of Meda in cost of goods sold as the acquired inventory is sold, which for purposes of the unaudited pro forma condensed
combined statement of operations is assumed to occur within the first year after closing.
|
e.
|
The estimated fair value allocated to Medas historical property, plant and equipment in the unaudited pro forma condensed combined balance sheet as of December 31, 2015 is based upon a preliminary assumption
that the estimated fair value approximates the net book value. Changes in the estimated fair values are expected based on valuation studies and other analyses which have not been performed to date. This estimate is preliminary and subject to change
and could vary materially from the actual adjustment on the consummation date. Accordingly, for the purposes of the unaudited pro forma financial information, Mylan believes, to the best of its knowledge, that the current net book value of
Medas property, plant and equipment represent the best estimate of fair value.
|
Based on estimated useful lives
averaging approximately 25 years for buildings, for each $50 million change in the total fair value adjustment there could be an annual change in depreciation expense of approximately $2.0 million.
Based on estimated useful lives averaging approximately 10 years for equipment, for each $30 million change in the total fair value adjustment
there could be an annual change in depreciation expense of approximately $3.0 million.
f.
|
Reflects the fair value adjustment for identifiable intangible assets of $5.9 billion. The fair value adjustment for identifiable intangible assets is preliminary and is determined based on the assumptions that market
participants would use in pricing an asset, based on the most advantageous market for the asset. The preliminary fair value estimate could include assets that are not intended to be used, may be sold or are intended to be used in a manner other than
their best use. The final fair value determination for identified intangible assets may differ materially from this preliminary determination.
|
The fair value adjustment estimate of identifiable intangible assets is preliminary and is determined using the income approach,
which is a valuation technique that calculates an estimate of the fair value of an
157
asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of
the identifiable intangible asset valuations, from the perspective of a market participant, include the estimated net cash flows for each year (including net revenues, cost of sales, development costs, selling, administrative and marketing costs,
and working capital), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each assets life cycle, competitive trends impacting the asset and each cash flow stream,
and other factors. The underlying assumptions used to prepare the discounted cash flow analysis may change. For these and other reasons, actual results may vary significantly from estimated results.
g.
|
Reflects the deferred income tax liability adjustment of $1.2 billion resulting from fair value adjustments for inventory, identifiable intangible assets and long-term debt acquired. This estimate was determined based
on the excess book basis over the tax basis using a 20 percent weighted average statutory tax rate. The total effective tax rate of Mylan could be significantly different depending on the post-closing geographical mix of income and other factors.
This estimate of deferred income tax liabilities is preliminary and is subject to change based upon Mylans final determination of the fair values of tangible and identifiable intangible assets acquired and liabilities assumed.
|
h.
|
Reflects the elimination of the historical goodwill amount and the recognition of estimated goodwill related to the proposed acquisition. Goodwill is calculated as the difference between the fair value of the
consideration expected to be transferred and the values assigned to the identifiable tangible and intangible assets acquired and liabilities assumed. The estimated goodwill calculation is preliminary and is subject to change based upon the final
determination of the fair value of assets acquired and liabilities assumed and finalization of the purchase price. Goodwill is not amortized, but is assessed at least annually or more frequently if events or changes in circumstances indicate that
the carrying value of goodwill may not be recoverable based on managements assessment.
|
i.
|
Reflects an adjustment to the fair value of Medas long-term debt.
|
5. EPD Business Unaudited Pro
Forma Condensed Combined Statement of Operations Adjustments
Adjustments included in the accompanying unaudited pro forma condensed combined statement
of operations are represented by the following:
a.
|
Represents an increase in amortization expense associated with fair value adjustments to the carrying value of intangible assets for the year ended December 31, 2015. The increase in amortization expense is
recorded as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except for useful lives)
|
|
Useful Lives
|
|
|
Fair Value
|
|
|
Amortization
January 1, 2015 -
February 27,
2015
|
|
Products rights and licenses
|
|
|
13 years
|
|
|
$
|
4,523.0
|
|
|
$
|
58.0
|
|
Contractual rights
|
|
|
2-5 years
|
|
|
|
320.0
|
|
|
|
18.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,843.0
|
|
|
$
|
76.8
|
|
Less: Historical amortization expense of the EPD Business
|
|
|
|
|
|
|
|
|
|
|
14.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense adjustment
|
|
|
|
|
|
|
|
|
|
$
|
62.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b.
|
Represents the elimination of transaction costs included in the consolidated financial statements of Mylan. An adjustment totaling $86.1 million was reflected in the unaudited pro forma condensed combined statement of
operations to eliminate transaction costs incurred by Mylan for the year ended December 31, 2015. There will be no continuing impact of these transaction costs on the consolidated results of operations of the Combined Company, and, as such,
these fees are not included in the unaudited pro forma condensed combined statement of operations.
|
158
c.
|
Represents an adjustment to depreciation expense associated with fair value adjustments to the property, plant and equipment for the year ended December 31, 2015.
|
d.
|
The pro forma adjustments were tax effected using the applicable statutory tax rate in the jurisdiction to which the adjustments related. The tax rate of Mylan could be significantly different depending on the
post-closing geographical mix of income and other factors.
|
e.
|
Adjustment to increase Mylan Shares outstanding after the closing of the EPD Transaction. In connection with the closing of the EPD Transaction, Abbotts subsidiaries received 110.0 million Mylan Shares as
consideration for the transfer of the EPD Business and each issued and outstanding share of Mylan Inc. common stock was converted into the right to receive one Mylan Share. For the year ended December 31, 2015 there is an adjustment of
18.3 million shares. This represents the weighted average impact of the Mylan Shares issued to affect the EPD Transaction. A weighted average is used as the transaction closed on February 27, 2015.
|
6. Meda Unaudited Pro Forma Condensed Combined Statement of Operations Adjustments
Adjustments included in the accompanying unaudited pro forma condensed combined statement of operations are represented by the following:
a.
|
Transactions between Mylan and Meda have been eliminated as if Mylan and Meda were consolidated affiliates for the period presented. Net third party sales and cost of sales of $42.8 million, respectively, have been
eliminated from the unaudited pro forma condensed combined statement of operations.
|
b.
|
Represents an increase in amortization expense associated with fair value adjustments to the carrying value of intangible assets for the year ended December 31, 2015. The increase in amortization expense is
recorded as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except for useful lives)
|
|
Useful Lives
|
|
|
Fair Value
|
|
|
Amortization
Year Ended
December 31, 2015
|
|
Product rights
|
|
|
20 years
|
|
|
$
|
8,500.0
|
|
|
$
|
425.0
|
|
Less: Historical amortization expense of Meda
|
|
|
|
|
|
|
|
|
|
|
360.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense adjustment
|
|
|
|
|
|
|
|
|
|
$
|
64.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
c.
|
Represents an adjustment to cost of goods sold for the amortization expense related to the inventory fair value adjustment of approximately $103.0 million.
|
d.
|
To record amortization of the fair value adjustment on the long-term debt assumed in connection with the proposed acquisition of Meda. Amortization was $0.9 million for the year ended December 31, 2015 using a
three year amortization period.
|
e.
|
Adjustment to tax effect the pro forma adjustments. A weighted average statutory tax rate of 20 percent was applied to the applicable pro forma adjustments. The total effective tax rate of Mylan after completion of the
proposed acquisition of Meda could be significantly different depending on the post-closing geographical mix of income and other factors.
|
f.
|
Adjustment to increase Mylan Shares outstanding after completion of the proposed acquisition of Meda. Under the terms of the Offer, Meda shareholders will receive a combination of cash and Mylan Shares. Refer to Note 3
for the computation of Mylan Shares to be issued in connection with the proposed acquisition of Meda.
|
7. Financing Adjustments
a.
|
In connection with the Offer, on February 10, 2016, Mylan entered into the Bridge Credit Agreement, among
Mylan, as borrower, Mylan Inc., as guarantor, Deutsche Bank AG Cayman Islands Branch, as
|
159
|
administrative agent and a lender, Goldman Sachs Bank USA, as a lender, Goldman Sachs Lending Partners LLC, as a lender, and other lenders party thereto from time to time. The Bridge Credit
Agreement provides for the Bridge Credit Facility consisting of a Tranche A Loan under which Mylan may obtain Loans in an aggregate amount up to $6.0 billion. The proceeds of the Loans will be applied solely to finance the proposed acquisition of
Meda shares and pay other costs associated with the proposed acquisition of Meda, the Bridge Credit Agreement and related transactions. The Loans will bear interest at LIBOR (determined in accordance with the Bridge Credit Agreement), if Mylan
chooses to make LIBOR borrowings, or at a base rate (determined in accordance with the Bridge Credit Agreement), in each case plus an applicable margin. The applicable margin for borrowings will be determined by reference to a grid based on
Mylans Debt Rating (as defined in the Bridge Credit Agreement), and such applicable margin will range from 0.125 percent to 1.225 percent per annum with respect to base rate borrowings and 1.125 percent to 2.225 percent per annum with respect
to LIBOR borrowings, in each case subject to increase by 0.25 percent per annum, 0.25 percent per annum and 0.50 percent per annum on the date that is 90, 180 and 270 days, respectively, after the funding date. The commitments under the Bridge
Credit Agreement will be available until the earliest to occur of February 8, 2017 and certain events relating to the completion or termination of the Offer set forth in the Bridge Credit Agreement. The Loans will be unsecured and will be
guaranteed by Mylan Inc. The Loans will mature on the day that is 364 days after the funding date. The Bridge Credit Agreement also provided for commitments in respect of Tranche B loans in an aggregate amount of up to $4.05 billion to be applied if
necessary to prepay the Revolving Credit Agreement, the 2014 Term Credit Agreement and the 2015 Term Credit Agreement and to pay fees and expenses relating thereto. The commitments in respect of such Tranche B loans were permanently terminated in
connection with the effectiveness of certain amendments to the Revolving Credit Agreement, the 2014 Term Credit Agreement and the 2015 Term Credit Agreement.
|
Mylan expects to use the borrowings from the Bridge Credit Facility to finance the proposed acquisition of Meda to the extent that the cash
portion of the Offer consideration is not funded from Mylans resources and/or alternative funding sources. The unaudited pro forma condensed combined balance sheet is adjusted to reflect Tranche A borrowings of approximately $6.0 billion,
which is classified as current in the unaudited pro forma condensed combined balance sheet.
For purposes of the unaudited pro forma
condensed combined statement of operations, Mylan has assumed that the amounts outstanding under the Bridge Credit Facility bear interest at LIBOR, plus an estimated margin ranging from 150250 basis points. The pro forma adjustment to interest
expense was approximately $153.3 million for the year ended December 31, 2015, at a weighted average rate of approximately 2.6 percent.
It is assumed that Mylan will incur approximately $208.0 million of debt issuance costs for the Bridge Credit Facility, primarily consisting of
financing fees and commitment fees. The fees Mylan will ultimately pay and the level of net debt expected to be incurred could vary significantly from what is assumed in the unaudited pro forma financial information. Variances could arise from
multiple factors including: other acquisitions Mylan may pursue, the amount of cash on hand at both Mylan and Meda at the time of the closing of the acquisition, actual timing and amounts of borrowings and repayments under the Bridge Credit
Facility, the actual mix of permanent debt / equity financing, the actual fixed / floating mix of permanent debt financing and Mylans credit rating. Accordingly, the estimated debt and interest expense reflected in the unaudited pro forma
financial information may change and the change could be significant. A 0.125 percent change in the interest rate could result in an increase or decrease in the pro forma interest expense of approximately $8 million for the year ended
December 31, 2015.
b.
|
A weighted average statutory tax rate of 20 percent was applied to the applicable pro forma adjustments. The total effective tax rate of Mylan after completion of the proposed acquisition of Meda could be significantly
different depending on the post-closing geographical mix of income and other factors.
|
160
8. IFRS to U.S. GAAP Adjustments
Medas consolidated financial statements were prepared in accordance with IFRS as issued by the IASB with all amounts presented in Swedish kronor, which
differs in certain respects from U.S. GAAP. The following adjustments have been made to convert Medas historical balance sheet as of December 31, 2015 and income statement for the year ended December 31, 2015 to U.S. GAAP for
purposes of the pro forma presentation.
a.
|
Actuarial gains and losses recognized in other comprehensive income under IFRS are recorded in profit and loss under U.S. GAAP. The adjustment is presented in the unaudited pro forma condensed combined statement of
operations. A weighted average statutory tax rate of 20 percent was applied to this adjustment. The total effective tax rate of Mylan after completion of the proposed acquisition of Meda could be significantly different depending on the post-closing
geographical mix of income and other factors.
|
b.
|
Represents certain differences regarding the tax effects of intercompany transfer of inventory under IFRS to conform to U.S. GAAP. Under IFRS taxes paid on intercompany transfers of inventory are recognized as tax
expense as incurred. Additionally, IFRS requires the recognition of deferred taxes on temporary differences between the tax basis of assets transferred. Under U.S. GAAP taxes paid on intercompany transfers are deferred as a prepaid asset until the
underlying asset is consumed or is sold to an unrelated party.
|
9. Comparative Per Share Information
The following table sets forth selected historical share information of Mylan and unaudited pro forma share information of Mylan after giving effect to the
acquisition of the EPD Business and the proposed acquisition of Meda. You should read this information in conjunction with Mylans consolidated financial statements for the year ended December 31, 2015 and the related notes thereto
incorporated by reference into this prospectus and Medas consolidated financial statements for the year ended December 31, 2015 included in this prospectus.
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2015
|
|
(in millions, except per share amounts)
|
|
Historical
|
|
|
Pro Forma
|
|
Earnings per ordinary share attributable to Mylan N.V. ordinary shareholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.80
|
|
|
$
|
1.51
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
1.70
|
|
|
$
|
1.44
|
|
|
|
|
|
|
|
|
|
|
Weighted average ordinary shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
472.2
|
|
|
|
518.7
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
497.4
|
|
|
|
543.9
|
|
|
|
|
|
|
|
|
|
|
161
LEGAL MATTERS
NautaDutilh N.V., our Dutch counsel, has provided an opinion regarding the validity of the Mylan Shares to be issued pursuant to the Offer.
EXPERTS
The
consolidated financial statements, and the related consolidated financial statement schedule, incorporated by reference into this prospectus from Mylans Annual Report on Form 10-K for the year ended December 31, 2015 and the effectiveness
of Mylans internal control over financial reporting have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated by reference herein. Such
consolidated financial statements and consolidated financial statement schedule have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of Meda AB as of December 31, 2015, 2014 and 2013 and for each of the three years in the period ended
December 31, 2015 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers AB, an independent auditor, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Mylan files annual, quarterly and current reports, proxy statements, and other information with the SEC under the Exchange Act. You may read and copy any of
this information at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC0330 for further information on the Public Reference Room. The SEC also maintains an Internet website from which
interested parties can electronically access our SEC filings, including the Registration Statement of which this prospectus forms a part and the exhibits and schedules thereto. The address of that site is http://www.sec.gov. Mylans Internet
website address is www.mylan.com. Information on our website does not constitute a part of this prospectus.
Mylan has filed a Registration Statement on
Form S-4 to register with the SEC the offer and sale of the Mylan Shares to be issued in connection with the Offer. This prospectus is a part of that Registration Statement. This prospectus, filed as part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement or the exhibits and schedules thereto as permitted by the rules and regulations of the SEC. For further information about Mylan and Mylans ordinary shares, you should refer
to the Registration Statement to which this prospectus relates, including the exhibits and schedules to the Registration Statement. Mylan may also file amendments to the Registration Statement. In connection with the Offer, Mylan has also filed the
Offer Document with the SFSA, which Mylan will publish upon approval by the SFSA. Mylan has also filed the EU Prospectus with the AFM, which Mylan will publish upon approval by the AFM. Investors and securityholders of Meda are urged to read any
documents filed with the SFSA, the SEC, the AFM or any other competent EU authority carefully and in their entirety (if and when they become available) before making an investment decision because they will contain important information about Mylan,
Meda and the Offer. Such documents will be available free of charge through the website maintained by the SEC at www.sec.gov, on Mylans website at www.medatransaction.mylan.com or, to the extent filed with the AFM, through the website
maintained by the AFM at www.afm.nl, or by directing a request to Mylan at +1 (724) 514-1813 or investor.relations@mylan.com. Any materials filed by Mylan with the SFSA, the SEC, the AFM or any other competent EU authority that are required to
be mailed to Meda shareholders will also be mailed to such shareholders.
162
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows Mylan to disclose important information to you by referring you to other documents filed separately with the SEC. This information is
considered to be part of this prospectus, except for any information that is superseded or modified by information included directly in this prospectus. This prospectus incorporates by reference the documents set forth below (other than information
furnished pursuant to Item 2.02 or Item 7.01 of a Current Report on Form 8-K) that Mylan has previously filed or furnished with the SEC. These documents contain important information about Mylan and its financial condition, business and
results.
|
|
|
Mylan N.V. Filings (File No. 333-199861)
|
|
Period
|
Annual Report on Form 10-K
|
|
Year Ended December 31, 2015, as filed on February 16, 2016.
|
|
|
Current Reports on Form 8-K
|
|
Filed on January 8, 2016, January 11, 2016, February 17, 2016, February 26, 2016, March 1, 2016 and March 11, 2016.
|
Mylan hereby further incorporates by reference additional documents that Mylan may file with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act on and after the date of this prospectus and prior to the consummation or termination of the Offer. These documents include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q and certain Current Reports on Form 8-K (or portions thereof) that are filed with the SEC. A hard copy of the documents incorporated by reference into this prospectus will not be sent to you unless requested.
You can obtain any of the documents incorporated by reference in this prospectus upon written or oral request to Mylan at +1 (724) 514-1813 or
investor.relations@mylan.com, the Handelsbanken shareholder service at [ ] or [ ] or from the SEC through the SECs website at the address described above. Documents incorporated by reference are
available from Mylan without charge, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference as an exhibit in the registration statement of which this prospectus forms a part. A hard copy of the
documents incorporated by reference into this prospectus will not be sent to you unless requested. IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM MYLAN, PLEASE CONTACT MYLAN NO LATER THAN FIVE BUSINESS DAYS BEFORE [ ], 2016, THE
EXPIRATION DATE FOR THE ACCEPTANCE PERIOD, OR, IF THE ACCEPTANCE PERIOD IS EXTENDED, NO LATER THAN FIVE BUSINESS DAYS BEFORE THE EXPIRATION DATE OF SUCH EXTENDED ACCEPTANCE PERIOD TO RECEIVE THEM BEFORE THE EXPIRATION DATE OF THE OFFER. IF YOU
REQUEST ANY INCORPORATED DOCUMENTS, MYLAN WILL MAIL THEM TO YOU BY FIRST-CLASS MAIL, OR OTHER EQUALLY PROMPT MEANS, WITHIN ONE BUSINESS DAY OF RECEIPT OF YOUR REQUEST.
163
ENFORCEABILITY OF CIVIL LIABILITIES
WE ARE ORGANIZED AND EXISTING UNDER THE LAWS OF THE NETHERLANDS, AND, AS SUCH, THE RIGHTS OF HOLDERS OF THE ORDINARY SHARES AND THE CIVIL LIABILITY OF OUR
DIRECTORS AND OFFICERS WILL BE GOVERNED IN CERTAIN RESPECTS BY THE LAWS OF THE NETHERLANDS AND OUR ARTICLES. IN ADDITION, A SUBSTANTIAL PORTION OF OUR ASSETS WILL BE LOCATED OUTSIDE OF THE UNITED STATES. UNDER OUR ARTICLES, UNLESS WE CONSENT IN
WRITING TO THE SELECTION OF AN ALTERNATIVE FORUM, THE COMPETENT COURTS OF AMSTERDAM, THE NETHERLANDS WILL BE THE SOLE AND EXCLUSIVE FORUM FOR ANY ACTION ASSERTING A CLAIM FOR BREACH OF A DUTY OWED BY ANY OF OUR DIRECTORS, OFFICERS, OR OTHER
EMPLOYEES (INCLUDING ANY OF OUR FORMER DIRECTORS, FORMER OFFICERS, OR OTHER FORMER EMPLOYEES TO THE EXTENT SUCH CLAIM ARISES FROM SUCH DIRECTOR, OFFICER, OR OTHER EMPLOYEES BREACH OF DUTY WHILE SERVING AS OUR DIRECTOR, OFFICER, OR EMPLOYEE) TO
US OR OUR SHAREHOLDERS; ANY ACTION ASSERTING A CLAIM ARISING PURSUANT TO OR OTHERWISE BASED ON ANY PROVISION OF DUTCH LAW OR OUR ARTICLES; ANY ACTION ASSERTING A CLAIM THAT IS MANDATORILY SUBJECT TO DUTCH LAW; OR TO THE EXTENT PERMITTED UNDER DUTCH
LAW, ANY DERIVATIVE ACTION OR PROCEEDING BROUGHT ON BEHALF OF US, IN EACH SUCH CASE SUBJECT TO SUCH COURT HAVING PERSONAL JURISDICTION OVER THE INDISPENSABLE PARTIES NAMED AS DEFENDANTS THEREIN.
AS A RESULT, IT MAY BE MORE DIFFICULT FOR HOLDERS OF THE ORDINARY SHARES TO SERVE PROCESS ON US OR OUR DIRECTORS AND OFFICERS IN THE UNITED STATES OR OBTAIN
OR ENFORCE JUDGMENTS FROM U.S. COURTS AGAINST US OR OUR DIRECTORS AND OFFICERS BASED ON THE CIVIL LIABILITY PROVISIONS OF THE U.S. SECURITIES LAWS. THERE IS DOUBT AS TO WHETHER THE COURTS OF THE NETHERLANDS WOULD ENFORCE CERTAIN CIVIL LIABILITIES
UNDER U.S. SECURITIES LAWS IN ORIGINAL ACTIONS OR ENFORCE CLAIMS FOR PUNITIVE DAMAGES. UNDER OUR ARTICLES, WE INDEMNIFY AND HOLD HARMLESS OUR DIRECTORS AND OFFICERS AGAINST ALL CLAIMS AND SUITS BROUGHT AGAINST THEM, SUBJECT TO LIMITED EXCEPTIONS.
164
Audited Consolidated Financial Statements of Meda AB
Contents
|
|
|
|
|
|
|
Page
|
|
Independent Auditors Report
|
|
|
F-2
|
|
Consolidated income statement for the years ended December 31, 2015, 2014 and
2013
|
|
|
F-3
|
|
Consolidated statement of comprehensive income for the years ended December 31,
2015, 2014 and 2013
|
|
|
F-4
|
|
Consolidated balance sheet as of December 31, 2015, 2014 and
2013
|
|
|
F-5
|
|
Consolidated cash flow statement for the years ended December 31, 2015, 2014 and
2013
|
|
|
F-6
|
|
Consolidated statement of changes in equity for the years ended December 31, 2015,
2014 and 2013
|
|
|
F-7
|
|
Notes to the Audited Consolidated Financial Statements of Meda
AB
|
|
|
F-8
|
|
F-1
Independent Auditors Report
To the Board of Directors and Shareholders of Meda AB
We have
audited the accompanying consolidated financial statements of Meda AB and its subsidiaries, which comprise the consolidated balance sheets as of December 31 2015, December 31 2014 and December 31 2013, and the related consolidated statements of
income and comprehensive income, of shareholders equity and cash flows for the years then ended.
Managements Responsibility for the
Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance
with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider
internal control relevant to the Companys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the financial position of Meda AB and its subsidiaries as of December 31 2015, December 31 2014 and December 31 2013, and the results of their operations and their cash
flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
PricewaterhouseCoopers AB
/s/ PricewaterhouseCoopers AB
Stockholm, Sweden
April 11, 2016
F-2
Consolidated income statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
Note
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Net sales
|
|
|
4, 5
|
|
|
|
19,648
|
|
|
|
15,352
|
|
|
|
13,114
|
|
Cost of sales
|
|
|
6
|
|
|
|
7,525
|
|
|
|
6,083
|
|
|
|
5,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
12,123
|
|
|
|
9,269
|
|
|
|
8,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
|
|
|
|
22
|
|
|
|
42
|
|
|
|
|
|
Selling expenses
|
|
|
|
|
|
|
4,359
|
|
|
|
3,718
|
|
|
|
2,993
|
|
Medicine and business development expenses
|
|
|
|
|
|
|
4,086
|
|
|
|
3,223
|
|
|
|
2,794
|
|
Administrative expenses
|
|
|
|
|
|
|
981
|
|
|
|
883
|
|
|
|
692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
4, 610
|
|
|
|
2,719
|
|
|
|
1,487
|
|
|
|
1,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
|
11,12
|
|
|
|
37
|
|
|
|
8
|
|
|
|
22
|
|
Finance costs
|
|
|
11,12
|
|
|
|
1,452
|
|
|
|
913
|
|
|
|
567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after financial items
|
|
|
|
|
|
|
1,304
|
|
|
|
582
|
|
|
|
1,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
|
|
|
13
|
|
|
|
112
|
|
|
|
180
|
|
|
|
198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
1,192
|
|
|
|
402
|
|
|
|
805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent company shareholders
|
|
|
|
|
|
|
1,176
|
|
|
|
399
|
|
|
|
807
|
|
Non-controlling interests
|
|
|
|
|
|
|
16
|
|
|
|
3
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,192
|
|
|
|
402
|
|
|
|
805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
1)
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
basic, SEKb
|
|
|
|
|
|
|
3.22
|
|
|
|
1.23
|
|
|
|
2.57
|
|
diluted, SEK
|
|
|
|
|
|
|
3.22
|
|
|
|
1.23
|
|
|
|
2.57
|
|
|
|
|
|
|
Average number of shares
1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
basic (thousands)
|
|
|
|
|
|
|
365,467
|
|
|
|
323,397
|
|
|
|
313,672
|
|
diluted (thousands)
|
|
|
|
|
|
|
365,467
|
|
|
|
323,397
|
|
|
|
313,672
|
|
|
|
|
|
|
Number of shares at year-end
2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
basic (thousands)
|
|
|
|
|
|
|
365,467
|
|
|
|
365,467
|
|
|
|
313,672
|
|
diluted (thousands)
|
|
|
|
|
|
|
365,467
|
|
|
|
365,467
|
|
|
|
313,672
|
|
Dividend per share (SEK)
2)
|
|
|
|
|
|
|
2.50
|
|
|
|
2.50
|
|
|
|
2.41
|
|
1)
|
For 2013 and 2014, recalculation has been done to consider the bonus issue element in the rights issue 2014.
|
2)
|
For 2013, recalculation has been done to consider the bonus issue element in the rights issue 2014.
|
The accompanying Notes form an integral part of the consolidated financial statements.
F-3
Consolidated statement of comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
Note
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Net income
|
|
|
|
|
|
|
1,192
|
|
|
|
402
|
|
|
|
805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that will not be reclassified to the income statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revaluation of defined benefit pension plans and similar plans, net after tax
|
|
|
24
|
|
|
|
55
|
|
|
|
292
|
|
|
|
113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55
|
|
|
|
292
|
|
|
|
113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified to the income statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation difference
|
|
|
24
|
|
|
|
376
|
|
|
|
2,118
|
|
|
|
510
|
|
Translation differences reversed to income statement
|
|
|
24
|
|
|
|
3
|
|
|
|
11
|
|
|
|
|
|
Net investment hedge, net after tax
|
|
|
24
|
|
|
|
308
|
|
|
|
1,014
|
|
|
|
277
|
|
Cash flow hedges, net after tax
|
|
|
24
|
|
|
|
1
|
|
|
|
9
|
|
|
|
17
|
|
Available-for-sale financial assets, net after tax
|
|
|
24
|
|
|
|
9
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81
|
|
|
|
1,108
|
|
|
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income for the period, net after tax
|
|
|
|
|
|
|
26
|
|
|
|
816
|
|
|
|
363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
1,166
|
|
|
|
1,218
|
|
|
|
1,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent company shareholders
|
|
|
|
|
|
|
1,150
|
|
|
|
1,215
|
|
|
|
1,168
|
|
Non-controlling interests
|
|
|
|
|
|
|
16
|
|
|
|
3
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,166
|
|
|
|
1,218
|
|
|
|
1,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes form an integral part of the consolidated financial statements.
F-4
Consolidated balance sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
Note
|
|
|
Dec. 31, 2015
|
|
|
Dec. 31, 2014
|
|
|
Dec. 31, 2013
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible assets
|
|
|
15
|
|
|
|
1,504
|
|
|
|
1,692
|
|
|
|
848
|
|
Intangible assets
|
|
|
16
|
|
|
|
47,478
|
|
|
|
50,798
|
|
|
|
29,666
|
|
Derivatives
|
|
|
22
|
|
|
|
|
|
|
|
25
|
|
|
|
|
|
Deferred tax assets
|
|
|
17
|
|
|
|
1,812
|
|
|
|
1,640
|
|
|
|
918
|
|
Available-for-sale financial assets
|
|
|
18
|
|
|
|
23
|
|
|
|
45
|
|
|
|
5
|
|
Other non-current receivables
|
|
|
21
|
|
|
|
262
|
|
|
|
305
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
|
|
|
|
51,079
|
|
|
|
54,505
|
|
|
|
31,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
20
|
|
|
|
2,876
|
|
|
|
2,988
|
|
|
|
1,982
|
|
Trade receivables
|
|
|
21
|
|
|
|
4,295
|
|
|
|
4,151
|
|
|
|
2,151
|
|
Other receivables
|
|
|
|
|
|
|
320
|
|
|
|
480
|
|
|
|
196
|
|
Tax assets
|
|
|
|
|
|
|
225
|
|
|
|
203
|
|
|
|
106
|
|
Prepayments and accrued income
|
|
|
|
|
|
|
290
|
|
|
|
266
|
|
|
|
181
|
|
Derivatives
|
|
|
22
|
|
|
|
149
|
|
|
|
208
|
|
|
|
49
|
|
Cash and cash equivalents
|
|
|
23
|
|
|
|
1,612
|
|
|
|
2,311
|
|
|
|
178
|
|
Total current assets
|
|
|
|
|
|
|
9,767
|
|
|
|
10,607
|
|
|
|
4,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
|
|
|
|
60,846
|
|
|
|
65,112
|
|
|
|
36,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
24
|
|
|
|
365
|
|
|
|
365
|
|
|
|
302
|
|
Other capital contributions
|
|
|
24
|
|
|
|
13,788
|
|
|
|
13,788
|
|
|
|
8,865
|
|
Other reserves
|
|
|
24
|
|
|
|
375
|
|
|
|
401
|
|
|
|
415
|
|
Retained earnings including profit for the year
|
|
|
|
|
|
|
6,431
|
|
|
|
6,142
|
|
|
|
6,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,959
|
|
|
|
20,696
|
|
|
|
15,243
|
|
Non controlling interests
|
|
|
|
|
|
|
3
|
|
|
|
16
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
|
|
|
|
20,956
|
|
|
|
20,680
|
|
|
|
15,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
25
|
|
|
|
22,507
|
|
|
|
26,817
|
|
|
|
7,792
|
|
Derivatives
|
|
|
22
|
|
|
|
19
|
|
|
|
22
|
|
|
|
33
|
|
Deferred tax liabilities
|
|
|
17
|
|
|
|
4,708
|
|
|
|
5,278
|
|
|
|
2,211
|
|
Pension obligations
|
|
|
26
|
|
|
|
2,273
|
|
|
|
2,430
|
|
|
|
1,107
|
|
Other non-current liabilities
|
|
|
27
|
|
|
|
2,474
|
|
|
|
2,464
|
|
|
|
32
|
|
Other provisions
|
|
|
28
|
|
|
|
337
|
|
|
|
375
|
|
|
|
209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
|
|
|
|
32,318
|
|
|
|
37,386
|
|
|
|
11,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
|
|
|
|
1,696
|
|
|
|
1,542
|
|
|
|
883
|
|
Current tax liabilities
|
|
|
|
|
|
|
515
|
|
|
|
483
|
|
|
|
464
|
|
Other liabilities
|
|
|
|
|
|
|
240
|
|
|
|
495
|
|
|
|
195
|
|
Accruals and deferred income
|
|
|
|
|
|
|
1,553
|
|
|
|
1,731
|
|
|
|
1,343
|
|
Derivatives
|
|
|
22
|
|
|
|
205
|
|
|
|
284
|
|
|
|
113
|
|
Borrowings
|
|
|
25
|
|
|
|
2,355
|
|
|
|
1,391
|
|
|
|
6,304
|
|
Other provisions
|
|
|
28
|
|
|
|
1,008
|
|
|
|
1,120
|
|
|
|
396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
7,572
|
|
|
|
7,046
|
|
|
|
9,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
39,890
|
|
|
|
44,432
|
|
|
|
21,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY AND LIABILITIES
|
|
|
|
|
|
|
60,846
|
|
|
|
65,112
|
|
|
|
36,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes form an integral part of the consolidated financial statements.
F-5
Consolidated cash flow statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
Note
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Cash flow from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after financial items
|
|
|
|
|
|
|
1,304
|
|
|
|
582
|
|
|
|
1,003
|
|
Adjustments for items not included in cash flow
|
|
|
30
|
|
|
|
3,373
|
|
|
|
2,668
|
|
|
|
2,246
|
|
Net change in pensions
|
|
|
|
|
|
|
45
|
|
|
|
46
|
|
|
|
19
|
|
Net change in provisions
|
|
|
|
|
|
|
112
|
|
|
|
601
|
|
|
|
116
|
|
Income taxes paid
|
|
|
|
|
|
|
803
|
|
|
|
551
|
|
|
|
390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities before changes in working capital
|
|
|
|
|
|
|
3,717
|
|
|
|
3,254
|
|
|
|
2,956
|
|
|
|
|
|
|
Cash flow from changes in working capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
|
|
|
198
|
|
|
|
182
|
|
|
|
97
|
|
Receivables
|
|
|
|
|
|
|
96
|
|
|
|
536
|
|
|
|
225
|
|
Liabilities
|
|
|
|
|
|
|
99
|
|
|
|
142
|
|
|
|
211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities
|
|
|
|
|
|
|
3,324
|
|
|
|
3,042
|
|
|
|
2,845
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of tangible assets
|
|
|
|
|
|
|
220
|
|
|
|
116
|
|
|
|
136
|
|
Acquisition of intangible assets
|
|
|
|
|
|
|
79
|
|
|
|
74
|
|
|
|
1,123
|
|
Acquisition of operation
|
|
|
19
|
|
|
|
149
|
|
|
|
8,744
|
|
|
|
|
|
Divestment of operation
|
|
|
19
|
|
|
|
695
|
|
|
|
25
|
|
|
|
|
|
Acquisition of financial assets available for sale
|
|
|
|
|
|
|
0
|
|
|
|
2
|
|
|
|
|
|
Divestment of financial assets available for sale
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
Decrease in financial receivables
|
|
|
|
|
|
|
3
|
|
|
|
0
|
|
|
|
1
|
|
Sale of non-current assets
|
|
|
|
|
|
|
0
|
|
|
|
55
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
|
|
262
|
|
|
|
8,906
|
|
|
|
1,255
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans raised
|
|
|
|
|
|
|
2 ,107
|
|
|
|
21,433
|
|
|
|
997
|
|
Loan repayments
|
|
|
|
|
|
|
5,464
|
|
|
|
14,770
|
|
|
|
1,902
|
|
New share issue
|
|
|
|
|
|
|
|
|
|
|
2,014
|
|
|
|
|
|
Decrease in financial liabilities
|
|
|
|
|
|
|
1
|
|
|
|
7
|
|
|
|
12
|
|
Dividend to parent company shareholders
|
|
|
|
|
|
|
914
|
|
|
|
756
|
|
|
|
680
|
|
Cash flow from financing activities
|
|
|
|
|
|
|
4,272
|
|
|
|
7,914
|
|
|
|
1,597
|
|
Cash flow for the period
|
|
|
|
|
|
|
686
|
|
|
|
2,050
|
|
|
|
7
|
|
|
|
|
|
|
Cash and cash equivalents at start of the year
|
|
|
|
|
|
|
2,311
|
|
|
|
178
|
|
|
|
194
|
|
Exchange rate difference in cash and cash equivalents
|
|
|
|
|
|
|
13
|
|
|
|
83
|
|
|
|
9
|
|
Cash and cash equivalents at year-end
|
|
|
23
|
|
|
|
1,612
|
|
|
|
2,311
|
|
|
|
178
|
|
|
|
|
|
|
Interest received and paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest received
|
|
|
|
|
|
|
29
|
|
|
|
5
|
|
|
|
22
|
|
Interest paid
|
|
|
|
|
|
|
1,071
|
|
|
|
736
|
|
|
|
423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
1,042
|
|
|
|
731
|
|
|
|
401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes form an integral part of the consolidated financial statements.
F-6
Consolidated statement of changes in equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to parent company
shareholders
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
Share
capital
|
|
|
Other
contributed-
capital
|
|
|
Other
reserves
|
|
|
Retained-
earnings-
including
profit for the
year
|
|
|
Total
|
|
|
Non-
controlling
interests
|
|
|
Total equity
|
|
Opening balance, January 1, 2013
|
|
|
302
|
|
|
|
8,865
|
|
|
|
776
|
|
|
|
6,364
|
|
|
|
14,755
|
|
|
|
32
|
|
|
|
14,723
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
361
|
|
|
|
|
|
|
|
361
|
|
|
|
2
|
|
|
|
363
|
|
Profit/loss for period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
807
|
|
|
|
807
|
|
|
|
2
|
|
|
|
805
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
361
|
|
|
|
807
|
|
|
|
1,168
|
|
|
|
0
|
|
|
|
1,168
|
|
Dividend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
680
|
|
|
|
680
|
|
|
|
|
|
|
|
680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing balance, December 31, 2013
|
|
|
302
|
|
|
|
8,865
|
|
|
|
415
|
|
|
|
6,491
|
|
|
|
15,243
|
|
|
|
32
|
|
|
|
15,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance, January 1, 2014
|
|
|
302
|
|
|
|
8,865
|
|
|
|
415
|
|
|
|
6,491
|
|
|
|
15,243
|
|
|
|
32
|
|
|
|
15,211
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
816
|
|
|
|
|
|
|
|
816
|
|
|
|
0
|
|
|
|
816
|
|
Profit/loss for period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
399
|
|
|
|
399
|
|
|
|
3
|
|
|
|
402
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
816
|
|
|
|
399
|
|
|
|
1,215
|
|
|
|
3
|
|
|
|
1,218
|
|
Non-cash issue
|
|
|
30
|
|
|
|
2,946
|
|
|
|
|
|
|
|
|
|
|
|
2,976
|
|
|
|
|
|
|
|
2,976
|
|
Non-cash issue costs
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
5
|
|
Tax on non-cash issue costs
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
New share issue
|
|
|
33
|
|
|
|
1,994
|
|
|
|
|
|
|
|
|
|
|
|
2,027
|
|
|
|
|
|
|
|
2,027
|
|
New share issue costs
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
17
|
|
Tax on new share issue costs
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
4
|
|
Divestment of operation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
|
|
|
|
31
|
|
Acquisition of holdings with non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
|
|
|
|
18
|
|
Share-based payments, settled using equity instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
8
|
|
|
|
|
|
|
|
8
|
|
Dividend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
756
|
|
|
|
756
|
|
|
|
|
|
|
|
756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing balance, December 31, 2014
|
|
|
365
|
|
|
|
13,788
|
|
|
|
401
|
|
|
|
6,142
|
|
|
|
20,696
|
|
|
|
16
|
|
|
|
20,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance, January 1, 2015
|
|
|
365
|
|
|
|
13,788
|
|
|
|
401
|
|
|
|
6,142
|
|
|
|
20,696
|
|
|
|
16
|
|
|
|
20,680
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
26
|
|
|
|
|
|
|
|
26
|
|
|
|
0
|
|
|
|
26
|
|
Profit/loss for period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,176
|
|
|
|
1,176
|
|
|
|
16
|
|
|
|
1,192
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
26
|
|
|
|
1,176
|
|
|
|
1,150
|
|
|
|
16
|
|
|
|
1,166
|
|
Divestment of operation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
Share-based payments, settled using equity instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
|
|
27
|
|
|
|
|
|
|
|
27
|
|
Dividend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
914
|
|
|
|
914
|
|
|
|
|
|
|
|
914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing balance, December 31, 2015
|
|
|
365
|
|
|
|
13,788
|
|
|
|
375
|
|
|
|
6,431
|
|
|
|
20,959
|
|
|
|
3
|
|
|
|
20,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 24 contains additional information on share capital, other capital contributions and other reserves.
The accompanying Notes form an integral part of the consolidated financial statements.
F-7
Notes Group
Note 1 Accounting policies
General information
Meda is a leading international specialty pharma company with a broad product portfolio and its own sales organization in more than 60 countries.
Including the markets where distributors handle sales, Medas products are sold in more than 150 countries. Meda AB is the Groups parent company and its headquarters are located in Solna, outside of Stockholm, Sweden. Meda is listed on
Nasdaq Stockholm.
Basis for preparation of reports
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB, and the
Swedish Financial Reporting Boards recommendation RFR 1 Supplementary Accounting Rules for Groups.
The consolidated accounts were
prepared using the cost method, apart from for remeasurement of available-for-sale financial assets, and financial assets and liabilities (including derivative instruments) measured at fair value through profit or loss.
Preparing financial statements to conform to IFRS requires the use of some critical accounting estimates. It also requires management to make
certain assessments in applying the companys accounting policies. Note 3 discloses the areas that require a more thorough assessment, are complex or in which assumptions and estimates are of significant importance to the consolidated financial
statements.
New standards and interpretations
New and amended standards applied by the Group
The
standards, amendments or interpretations that were applied by the Group for the first time for the financial year beginning on January 1, 2015 have no significant impact on the Groups financial statements.
New standards and interpretations not yet applied by the Group
The following new standards and interpretations have been published:
|
|
IFRS 9 Financial Instruments addresses classification, measurement and recognition of financial liabilities and
assets. The full version of IFRS 9 was issued in July 2014 and replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 contains a blended approach to measurement but simplifies it in some
respects. There will be three measurement categories for financial assets: amortized cost, fair value through other comprehensive income and fair value through profit or loss. The classification of an instrument depends on the companys
business model and the nature of the instrument. Investments in equity instruments are to be recognized at fair value through profit or loss. There is, however, an option at initial recognition to recognize the instrument at fair value through other
comprehensive income. In such a case, no reclassification is made to profit or loss upon divestment of the instrument. IFRS 9 has also introduced a new model to calculate credit loss provisions based on expected credit losses. For financial
liabilities, the classification and measurement are not changed other than in cases where a liability is recognized at fair value through profit or loss based on the fair value option. In these cases, changes in value attributable to changes in the
entitys own credit risk are to be re-cognized in other comprehensive income. IFRS 9 lowers the criteria for the application of hedge accounting by replacing the 80125 criteria with a requirement for an economic relationship between the
hedging instrument and the hedged item, and for the hedging quota to be the same as that used in risk management. The hedge
|
F-8
|
documentation requirement is also changed to some extent in comparison with IAS 39. The standard will be applied for the financial year starting on January 1, 2018. Early adoption is
permitted. The Group has not yet assessed the impact of IFRS 9.
|
|
|
IFRS 15 Revenue from Contracts with Customers regulates how revenue is to be recognized. The principles upon which IFRS 15 is based give the users of financial statements more useful information on the entitys
revenue. Under this increased disclosure requirement, information must be provided on the revenues nature, timing and uncertainty in connection with revenue recognition, as well as cash flows arising from customers with contracts. According to
IFRS 15, revenue should be recognized when the customer assumes control of the sold goods or service and is able to use or benefit from the goods or service. IFRS 15 replaces IAS 18 Revenue and IAS 11 Construction Contracts as well as the related
SIC and IFRS Interpretations Committees interpretation. IFRS 15 goes into effect on January 1, 2018. Early adoption is permitted. The Group has not yet assessed the impact of IFRS 15.
|
|
|
IFRS 16 Leases. In January 2016, IASB issued a new lease standard that will replace IAS 17 Leases and the related interpretations IFRIC 4, SIC-15 and SIC-27. The standard requires assets and liabilities arising from all
leases, with some exceptions, to be recognized on the balance sheet. This model reflects that, at the start of a lease, the lessee obtains the right to use an asset for a period of time and has an obligation to pay for that right. The accounting for
lessors will in all material aspects be unchanged. The standard is effective for annual periods beginning on or after January 1, 2019. Early adoption is permitted. The Group has not yet assessed the impact of IFRS 16.
|
No other IFRSs or IFRS Interpretations Committee interpretations that have not yet gone into effect are expected to have any significant impact on the Group.
Changes in external reporting
As of January 1,
2015, Meda reports all medical device products by geographic area and product category. These products were previously not allocated in full by geographic area and were recognized as other sales in the reporting by product category. The change has
not resulted in any change in the reporting by geographic area for 2014. Other Sales by product category for 2014 have been adjusted from SEK 492 million to SEK 235 million, with SEK 28 million allocated to Rx and SEK 229 million
allocated to Cx/OTC. Other sales by geographic area for 2013 have been adjusted from SEK 240 million to SEK 202 million, with SEK 38 million allocated to U.S. Other Sales by product category for 2013 have been adjusted from SEK
396 million to SEK 202 million, with SEK 15 million allocated to Rx and SEK 179 million allocated to Cx/OTC.
Consolidated accounts
Subsidiaries
Subsidiaries are companies over
which the Group has a controlling influence. The Group controls a company when it is exposed to or has the right to a variable yield from its holding in the company and has the ability to affect the yield through its influence over the company.
Subsidiaries are consolidated from the date on which the controlling influence is transferred to the Group. They are deconsolidated from the date the controlling influence ceases. The Group uses the acquisition method to recognize its business
combinations. The purchase consideration for the acquisition of a subsidiary consists of the fair value of transferred assets, liabilities incurred to the previous owners of the acquired entity and the shares issued by the Group. The purchase
consideration includes the fair value of all assets or liabilities arising from an agreement on an additional purchase consideration. Identifiable acquired assets as well as liabilities assumed in a business combination are measured initially at
their fair values on the acquisition date. The excess is recognized as goodwill and consists of the difference between the purchase consideration and the fair value of the Groups share of the identifiable net assets acquired.
Acquisition-related costs are expensed in the income statement in the period they arise. Intra-Group transactions, balance sheet items and unrealized gains on transactions between Group companies are fully eliminated.
F-9
Segment reporting
Operating segments are reported in a way that is consistent with the internal reporting which is submitted to the highest executive decision-maker. The highest
executive decision-maker is the person/persons responsible for allocating resources and assessing the operating segments results. For Meda, this has been identified as Executive management team. Division into geographic areas reflects the
Groups internal organization and reporting system. The areas are Western Europe, US and Emerging Markets.
Foreign currency translation
Functional and presentation currency
Items included in
the financial statements of each of the Groups entities are valued using the currency of the economic environment in which the entity mainly operates (the functional currency). The consolidated financial statements are presented in Swedish
kronor (SEK), which is the parent companys functional and presentation currency.
Transactions and balance sheet items
Foreign currency transactions are translated into the functional currency using the exchange rates in effect on the transaction date. Translation differences
arising upon payment of such transactions and when translating monetary assets and liabilities at the exchange rate on the reporting date are recognized in net financial expense through profit or loss. Exceptions are when transactions are hedges
that meet the criteria for hedge accounting of cash flows or of net investments, where gains/losses are recognized in other comprehensive income.
Translation of foreign subsidiaries
Assets and
liabilities in foreign operations, including goodwill and other surplus and deficit values, are translated into Swedish kronor at the exchange rate on the reporting date. Income and expenses in a foreign operation are translated to Swedish kronor at
an average rate that approximates the exchange rates on each transaction date. Translation differences arising in the translation of foreign operations are recognized in other comprehensive income.
Net investments in foreign operations
Translation
differences arising in the translation of a foreign net investment and associated effects of the hedging of net investments are recognized as a separate component of other comprehensive income. When divesting foreign operations, the cumulative
translation differences attributable to the divested operations, less any currency hedging, are reclassified from other comprehensive income to profit or loss for the year as part of the -capital gain/loss.
Property, plant and equipment
Property, plant and
equipment are stated at cost of acquisition less depreciation. The cost of acquisition includes expenditures that can be related directly to the acquisition of the asset. Land is not depreciated. Depreciation on other assets in order to allocate
their costs of acquisition down to their estimated residual values, is calculated using the straight-line method according to plan over their estimated useful lives, as follows:
|
|
Machinery and plant 314 years
|
|
|
Equipment and installations 314 years
|
F-10
The assets residual values and useful lives are reviewed on each reporting date and are adjusted if
required. An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount exceeds its estimated recoverable amount. Gains and losses on disposals are determined by comparing sales proceeds
with carrying amounts and are recognized through profit or loss.
Intangible assets
Goodwill
Goodwill arises in connection with the
acquisition of subsidiaries and re-presents the amount by which the purchase consideration exceeds the fair value of the Groups share of the acquired companys identifiable net assets. Goodwill is tested for impairment annually or as
needed and is -carried at cost less accumulated impairment losses. Gains or losses on divestment of an entity include the remaining carrying amount of goodwill relating to the divested entity. Goodwill is allocated to cash-generating units in
impairment testing.
Product rights
Product rights
have a limited useful life and are carried at cost less accumulated amortization and, where appropriate, impairment losses. Amortization is used to distribute the cost of product rights over their estimated useful life, usually 1025 years. The
amortization pattern for product rights is adapted to the amount of expected earnings. The value of product rights is tested regularly to identify whether impairment exists. See also Note 3 and 16.
Software
Acquired computer software licenses are
capitalized based on the costs incurred when the specific software was acquired and brought into use. These costs are amortized over the estimated useful life of the assets, -usually 37 years.
Research and development
Research expenditure is
expensed immediately. Development project expenditure (for product development) is capitalized in the Group as an intangible asset to the extent this expenditure is very likely to generate future economic benefits. Acquisition costs of such
intangible assets are amortized over the estimated useful life of the assets. Other development expenditure is expensed as it occurs. Expenditure must meet stringent requirements to be recognized as an asset. With stringent requirements, Meda
believes that it is not very likely that a product (drug) will generate future economic benefits before being approved by the relevant registration authority. Meda has no development projects that meet these high requirements, so no development
expenditure was recognized as an asset.
Impairment
Assets that have an indefinite useful life, i.e. goodwill, are not subject to amortization but are tested annually for any impairment. Assets subject to
amortization are assessed for impairment of value whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the assets carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an assets fair value less selling expenses and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units).
F-11
Cash-generating units
In business combinations goodwill is allocated to the Groups cash-generating units. A cash-generating unit represents the lowest level in the Group at
which the goodwill in question is monitored by internal control. Meda has four separate cash-generating units to which goodwill is allocated, see Note 16.
Financial assets
Financial assets are recognized when
the Group is party to the instruments contractual terms. Purchases and sales of financial instruments are recognized on the trade date, i.e. the date on which the Group commits to purchase or sell the asset. Financial assets are removed from
the balance sheet when the right to receive cash flows from the instrument expires or is transferred and the Group has transferred substantially all risks and rewards of ownership.
The Group classifies its financial assets into the following categories: loan and trade receivables, financial assets measured at fair value
through profit or loss and available-for-sale financial assets. The classification depends on the purpose for which the instruments are used. The instruments are classified at initial recognition.
Financial instruments are initially recognized at fair value plus transaction costs. This applies to all financial assets with the exception
of those measured at fair value through profit or loss, which are initially recognized at fair value but the related trans-action costs are recognized through profit or loss.
Loan receivables and trade receivables
Loan receivables
and trade receivables are non-derivative financial assets that have fixed or determinable payments and are not quoted on an active market. They are included in current assets, except for items with maturities more than 12 months from the reporting
date, which are classified as non-current assets. Loan and trade receivables are recognized at amortized cost using the effective interest method less any provision for a decrease in value.
Financial assets measured at fair value though profit or loss
Financial assets measured at fair value through profit or loss are financial assets that are held for trading. A financial asset is classified in this category
if it is primarily acquired for the purpose of selling in the short-term. Derivatives are classified as if they are held for trading unless they are identified as hedging instruments. Assets in this category are classified as current assets if they
are expected to be sold within 12 months, otherwise they are classified as non-current assets. Assets in this category are recognized after the date of acquisition at fair value. Changes in fair value are recognized in net financial income/expense
through profit or loss in the period they arise.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative assets that are either designated in this category or not classified to any of the other categories.
They are included in non-current assets unless Group management intends to divest the asset within 12 months from the end of the reporting period. Assets in this category are recognized after the date of acquisition at fair value. Changes in fair
value for monetary and non-monetary securities in this category are recognized in other comprehensive income in the provision for available-for-sale financial assets. Exchange differences on monetary securities are recognized in net financial
income/expense through profit or loss, while translation differences on non-monetary securities are recognized in other comprehensive income in the provision for available-for-sale financial assets. When securities in this category are sold,
accumulated adjustments of fair value previously recognized in other comprehensive income are transferred to profit or loss.
F-12
Impairment of financial assets
The Group performs an assessment on each reporting date of whether there is objective evidence that a financial asset or group of financial assets is impaired.
In the case of available-for-sale financial assets, impairment is indicated if there is evidence of a material or lasting decline in the fair value of the asset below its cost. If this can be proved, the accumulated loss, -calculated as the
difference between the cost of acquisition and the current fair value, less any previous impairment losses recognized through profit or loss, is moved from other comprehensive income and recognized through profit or loss. A provision for any
decrease in the value of trade receivables is made when there is objective evidence that the Group will not be able to recover all past due amounts as per the receivables original terms. The reserved amount is recognized through profit or
loss.
Financial liabilities
Financial liabilities
are recognized when the Group is party to the instruments contractual terms. Financial liabilities are removed from the balance sheet when the liability is eliminated through completion, annulment or -termination of the agreement. The Group
classifies its financial liabilities in the categories financial liabilities measured at fair value through profit or loss, i.e derivatives, and other financial liabilities.
Borrowings
Borrowings are initially recognized at fair
value, net after transaction costs. Borrowings are subsequently recognized at amortized cost. Any difference between the proceeds received, net of transaction costs, and the repayment amount is recognized through profit or loss over the loan period
using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer payment of the liability for at least 12 months after the reporting date.
Trade payables
Trade payables are initially recognized
at fair value and thereafter at amortized cost using the effective interest method.
Derivatives and hedging
Derivatives are recognized on the balance sheet on the contract day and measured at fair value, both initially and in subsequent remeasurements. The method of
recognizing the gain or loss from remeasurement depends on whether the derivative is designated as a hedging instrument and whether it also fulfills the hedge accounting criteria of IAS 39. Meda holds both derivatives that do and do not qualify for
hedge accounting. Fair value disclosure for various derivatives used for hedging purposes can be found in Notes 2 and 22. Changes in the hedge reserve in equity are specified in Note 24. Derivatives are classified as a non-current asset or
non-current -liabilities if the time to maturity exceeds 12 months. If the time to maturity is less than 12 months, the derivative is classified as a current asset or current liability.
Cash flow hedges
The effective part of changes in fair
value of the Groups interest rate derivatives that are identified as cash flow hedges and meet the criteria for hedge accounting according to IAS 39 is recognized in other comprehensive income. The gain or loss attributable to the ineffective
part is recognized immediately through profit or loss as financial income or expense. Certain transactions are hedged through currency forward contracts. The Group does not meet the criteria for hedge accounting for currency forward contracts
according to IAS 39. Changes in fair value are recognized as financial income or expense through profit or loss. Accumulated amounts in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, e.g. when
the forecast interest payment which is hedged takes place.
F-13
Hedging of net investments
Hedging of net investments in foreign operations is recognized in the same way as cash flow hedges. The effective part of changes in fair value of the
Groups hedging instruments is recognized in other comprehensive income. The gain or loss attributable to the ineffective part is recognized through profit or loss. Accumulated gains and losses in equity are recognized through profit or loss
when foreign operations are disposed of in whole or in part.
Fair value hedges
Certain loans are hedged through currency forward contracts. The Group does not meet the criteria for hedge accounting for currency forward contracts according
to IAS 39. Changes in fair value are recognized as financial income or expense through profit or loss.
Inventories
Inventories are carried at the lower of cost (weighted average price) and the net realizable value. Acquisition costs relate to raw materials, direct labor,
freight, other direct costs and related indirect production costs. The net realizable value is the estimated selling price in operating activities less applicable variable selling expenses.
Cash and cash equivalents
Cash and cash equivalents
include cash and bank balances and other -current investments with maturities of less than three months. Utilized bank overdrafts are recognized in the balance sheet as borrowings among -current liabilities.
Equity
Transaction costs directly attributable to the
issue of new shares or -warrants are recognized, net after tax, in equity as deductions from the issue proceeds.
Taxes
Income taxes comprise current and deferred tax. Income taxes are recognized through profit or loss except when the underlying transaction is recognized
directly in equity, in which case the related tax effect is recognized in equity or other comprehensive income. Current tax is tax that will be paid or received for the current year, applying the tax rates enacted or substantially enacted as of the
reporting date. This includes adjustment of current tax attributable to prior periods. Deferred tax is recognized in full using the balance sheet liability method on all temporary differences arising between the tax base of assets and liabilities
and their carrying amounts in the consolidated accounts. Deferred tax is determined using the tax rates and tax rules enacted or substantially enacted by the reporting date and that are expected to apply when the related deferred tax asset is
realized or the deferred tax liability is settled. Deferred tax assets relating to deductible temporary differences and loss carry-forwards are only recognized where it is probable that they will be used and will result in lower future tax payments.
Employee benefits
The Group has various
post-employment benefit plans including benefit and defined contribution pension plans and post-employment healthcare benefits.
Pension obligations
A defined contribution plan is a pension plan under which fixed contributions are paid to a separate legal entity. The Groups obligations are
limited to the contributions it has undertaken to pay. The obligations with respect to
F-14
the contributions for defined contribution plans are recognized as staff costs in profit or loss for the year as they are earned through the employees service during the period. Prepaid
contributions are recognized as an asset to the extent cash payment or a reduction of future payments will accrue to the Group.
A defined
benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service or salary. The liability recognized on the balance sheet for
defined benefit pension plans is the present value of the defined benefit obligation on the reporting date less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit
credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash flows using interest rates on first-class corporate bonds, mortgage bonds or government bonds that are issued in the currency
in which the benefits will be paid and that have terms to maturity comparable to the terms of the related pension liability. Actuarial gains and losses arising from experience-based adjustments and changes in actuarial assumptions are recognized in
other comprehensive income during the period in which they arise. Costs for prior periods of service are recognized immediately through profit or loss.
Healthcare benefits
The Group offers healthcare benefit
plans. The accounting method and assumptions resemble those used for defined benefit pension plans. -Actuarial gains and losses arising from experience-based adjustments and changes in actuarial assumptions are recognized in other comprehensive
income during the period in which they arise. The value of these obligations is calculated annually by independent actuaries.
Share-based payment
IFRS 2 distinguishes between payments settled with cash and payments settled with equity instruments. For the Groups share based compensations
that is settled with equity instruments, the cost is determined by the Companys fulfillment of performance criteria for each program. The cost is recognized in the income statement over the vesting period of 3 years with equity as offsetting
entry. The number of shares to be alloted for each program is based on above fulfillment of the performance criteria divided by the volume weighted average share price of Medas class A-shares. Social security costs are recognized through
profit or loss and are from allotment based on Medas class A-shares fair value at each balance date.
Cash-settled warrants give
rise to a commitment to the employees which are measured at fair value and recognized as an expense with a corresponding increase in liabilities. Fair value is initially measured on the date of allotment and distributed over the vesting period
including social security costs. The fair value of the cash-settled warrants is calculated according to the Black & Scholes model taking into account the terms and conditions for the allotted instruments. The liability is remeasured on each
reporting date and when it is settled. All changes in fair value on liabilities are recognized through profit or loss for the year as a staff cost including social security costs.
See Note 8 for information on outstanding incentive programs as of December 31, 2015.
Provisions
A provision is recognized in the balance
sheet when the Group has a pre-sent legal or informal obligation resulting from past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
A restructuring provision is recognized when the Group has established a detailed and formal restructuring plan and restructuring has either
started or been publically announced. No provisions are made for future operating losses.
F-15
The provisions are valued at the present value of the amount expected to be required to settle
the obligation. The discount interest rate reflects a current market estimate of the time value of money and the risks associated with the provision. The increase in the provision dependent on the passing of time is recognized as interest expense.
Income statement classified according to function
Medas income statement is classified according to function and consist of the following cost functions:
Cost of sales
Costs directly attributable to purchase and
manufacture of products sold during the period.
Selling expenses
Costs directly attributable to sales such as marketing expenses.
Medicine and business development expenses
Costs related to
development, registration, pharmacovigilance, quality and business related development of recent and future product portfolio. This include amortizations on product rights.
Administrative expenses
Costs for administration not
attributable to above functions.
Revenue recognition
Revenue consists of the fair value of goods and services sold excluding -value-added tax and discounts, and after eliminating sales within the Group. Revenue
is recognized as:
Goods sold and contract manufacturing
Goods sold and contract manufacturing are recognized as revenue when a Group company has delivered products to a customer, the customer has accepted the
products, and payment of the related receivable is reasonably assured. Revenue is adjusted for the value of expected returns which is based upon the historical rate of returns.
Royalty income
Income from royalties is accrued as
prescribed in the relevant agreement.
Services sold and other income
Services sold are recognized as revenue in the accounting period in which the services are rendered.
Interest income
Interest income is recognized as
interest income on a time-proportion basis using the effective interest method.
Leases
Leases in which the risks and rewards associated with ownership are essentially transferred to the Group are classified as finance leases. When the leased
asset is initially recognized, it is measured at the fair value or
F-16
present value, whichever is lowest, of the minimum lease payments. The asset is thereafter recognized according to the accounting principles that apply for the asset. The depreciation period may
not, however, exceed the lease term.
All other leases are operating leases and, accordingly, the leased asset is not recognized in the
balance sheet. Costs associated with operating leases are recognized through profit or loss on a straight-line basis over the lease term. Discounts received are recognized as a portion of the total lease cost over the lease term.
Dividends
Dividends to the parent companys
shareholders are recognized as a liability in the Groups financial statements in the period in which the dividends are approved by the parent companys shareholders.
Earnings per share
Calculation of earnings per share is
based on consolidated profit for the year attributable to parent company shareholders, divided by the weighted average number of outstanding ordinary shares during the year. When calculating diluted earnings per share, the average number of
outstanding ordinary shares is adjusted where appropriate to take into account the effects of diluting potential ordinary shares. There were no potential diluted ordinary shares in 2015. The dilutive effect of potential ordinary shares is only
recognized if a conversion to ordinary shares would lead to a reduction in diluted earnings per share. Further information is provided in Note 14.
Other information
The financial statements are reported
in SEK million unless otherwise stated. Some tables may not add up because figures were rounded off.
Note 2 Financial risks
The Group is exposed to various financial risks through its operations. Medas management of these risks is centralized to the Groups internal bank
and is regulated in the Groups financial policy. The objective is to identify, quantify, and keep risks of adverse impact on the Groups income statements, balance sheets, and cash flows at suitable levels.
Currency risk
Transaction exposure
Transaction exposure is the risk of impact on the Groups net income and cash flow due to change in the value of commercial flows in foreign currencies in
conjunction with exchange rate fluctuations. Meda has sales through its own sales organizations in more than 60 countries. Sales to other -countries occur as exports in both the customers local currency and other currencies such as EUR and
USD. Purchases are mainly made in EUR, SEK and USD. The Group is continually exposed to transaction risk. This exposure is however limited to a few units, and the exposure that rises in trade receivables and trade payables denominated in foreign
currency is continuously hedged. On December 31, 2015, currency derivatives that hedged transaction exposure had a net fair value of SEK 36 million (13; 11). Hedge accounting is not applicable to these transactions, which means that
changes of the fair value are carried to the income statement.
Translation exposure balance sheet
Most of the Groups operations are conducted in subsidiaries outside Sweden in functional currencies other than SEK. Translation exposure arises in the
Group for net investments in foreign operations. Medas translation
F-17
exposure is for the most part in EUR, but also in USD. The Group hedges risk partially by taking external loans and contracting for currency swaps in the respective currency. Hedge accounting in
accordance with IAS 39 is applied for these hedging transactions. Translation differences recognized in other comprehensive income in 2015 that relate to net investments in foreign operations amounted to SEK 376 million (2,118; 510), and
translation differences from hedging instruments for net investments amounted to SEK 308 million (1,014; 277) after tax.
Translation
exposure income statement
Group sales are generated principally in currencies other than SEK. Changes in exchange rates therefore have a
significant effect on the consolidated income statement since consolidation of the foreign subsidiaries income statements is in SEK. As the subsidiaries mainly operate in local currencies, these exposures are not hedged. Thus, fluctuations in
exchange rates have no significant impact on competition or margins.
The next table shows the annual theoretical translation effect on
Medas net sales and profit before tax. Calculated effects are based on recognized figures for 2015 excluding restructuring costs and other itmes affecting comparability. The 2015 average exchange rates were 9.35346 for EUR/SEK and 8.43026 for
USD/SEK.
|
|
|
|
|
|
|
|
|
|
|
|
|
Parameter
|
|
Change,
%
|
|
|
Effect on net
sales, SEK m
|
|
|
Effect on profit
after tax, SEK m
|
|
On December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR/SEK
|
|
|
+/1
|
|
|
|
+/98
|
|
|
|
+/31
|
|
USD/SEK
|
|
|
+/1
|
|
|
|
+/36
|
|
|
|
+/4
|
|
Other currencies/SEK
|
|
|
+/1
|
|
|
|
+/49
|
|
|
|
+/1
|
|
|
|
|
|
On December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR/SEK
|
|
|
+/1
|
|
|
|
+/84
|
|
|
|
+/15
|
|
USD/SEK
|
|
|
+/1
|
|
|
|
+/24
|
|
|
|
+/1
|
|
Other currencies/SEK
|
|
|
+/1
|
|
|
|
+/31
|
|
|
|
+/1
|
|
|
|
|
|
On December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR/SEK
|
|
|
+/1
|
|
|
|
+/69
|
|
|
|
+/11
|
|
USD/SEK
|
|
|
+/1
|
|
|
|
+/23
|
|
|
|
+/1
|
|
Other currencies/SEK
|
|
|
+/1
|
|
|
|
+/26
|
|
|
|
+/1
|
|
Undiscounted financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On December 31, 2015 SEK million
|
|
< 1 year
|
|
|
12 years
|
|
|
23 years
|
|
|
34 years
|
|
|
45 years
|
|
|
> 5 years from
the reporting date
|
|
Borrowings
|
|
|
2,891
|
|
|
|
3,130
|
|
|
|
7,540
|
|
|
|
9,769
|
|
|
|
3,746
|
|
|
|
|
|
Unconditional deferred payment
|
|
|
|
|
|
|
2,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
40
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
1,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On December 31, 2014 SEK million
|
|
< 1 year
|
|
|
12 years
|
|
|
23 years
|
|
|
34 years
|
|
|
45 years
|
|
|
> 5 years from
the reporting date
|
|
Borrowings
|
|
|
1,967
|
|
|
|
1,949
|
|
|
|
2,610
|
|
|
|
7,275
|
|
|
|
12,620
|
|
|
|
6,195
|
|
Unconditional deferred payment
|
|
|
|
|
|
|
|
|
|
|
2,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
21
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
1,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On December 31, 2013 SEK million
|
|
< 1 year
|
|
|
12 years
|
|
|
23 years
|
|
|
34 years
|
|
|
45 years
|
|
|
> 5 years from
the reporting date
|
|
Borrowings
|
|
|
6,652
|
|
|
|
3,955
|
|
|
|
4,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
19
|
|
|
|
18
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Groups financial derivatives, which will be settled gross, comprised various currency forward contracts on the
reporting date (see also Note 22). On the reporting date, the contractually agreed undiscounted cash flows from these instruments, maturing within 12 months, stood at SEK 23,835 million and SEK 23,895 million respectively (SEK
23,907 million and SEK 23,792 million respectively; SEK 18,494 million and SEK 18,429 million respectively).
Interest rate risk
Interest risk refers to the risk that changes in general interest rates may have an adverse effect on the Groups net income. The time taken for
interest rate fluctuations to affect profit/loss depends on the fixed interest period for the loan. As per Group policy, the loan portfolios fixed interest period should be 3 -15 months on average. On December 31, 2015, the average period
was 5.5 months.
Meda uses interest rate swaps to extend/shorten the period of fixed interest on underlying loans. As per Group policy,
the duration of an interest rate swap may not exceed five years. Hedge accounting is applied to these transactions, and fair value is charged to other comprehensive income. In 2015, interest rate swaps had an impact on other comprehensive income of
SEK 1 million (9; 17) from cash flow hedging after tax. The fair value included in the consolidated balance sheet for interest rate swaps as of December 31, 2015 was a net amount of SEK 23 million (22; 33).
On December 31, 2015, Group borrowings of SEK 24,862 million were mainly distributed as follow: EUR 1,614 million
(SEK 14,834 million), USD 610 million (SEK 5,149 million), and SEK 4,879 million. The average interest rate including credit margins on December 31, 2015 was 2.5% (3.6; 2.8). Interest expense for 2016 for this loan portfolio
at unchanged interest rates would thus amount to approximately SEK 600 million. If interest rates change instantaneously +/ 1 percentage point, Medas net income would change by +/ SEK 168 million (135; 119) on an annual
basis, taking into account the loan amounts and fixed interest rates that existed on December 31, 2015. Further information can be found in Note 25.
Refinancing risk
Refinancing risk is the risk that the
refinancing of a maturing loan is not feasible, and the risk that refinancing must be done during unfavorable market conditions at unfavorable interest rates. Meda seeks to limit refinancing risk by spreading the maturity structure of the loan
portfolio over time and spreading financing over several counterparties. On December 31, 2015, Meda had SEK 28,000 million (33,000; 23,000) in available credit facilities. The basis of the Groups debt financing is syndicated bank
loans of SEK 25,000 million with nine Swedish and foreign banks. This financing is augmented with borrowing via a Swedish MTN program with an upper limit of SEK 7,000 million, a Swedish commercial paper program with an upper limit of
SEK 4,000 million, and a bilateral bank loan of SEK 2,000 million.
Confirmed credit facilities were as follow on December 31, 2015:
|
|
Bond loan of SEK 400 million maturing in April 2016
|
|
|
Bilateral bank loan of SEK 2,000 million maturing in October 2017
|
|
|
Bond loan of SEK 600 million maturing in April 2018
|
|
|
Bond loan of SEK 750 million maturing in April 2019
|
F-19
|
|
Credit facility with nine banks amounting to SEK 25,000 million -maturing 20162020
|
|
|
|
Term loan of SEK 6,063 million maturing in December 2018
|
|
|
|
Revolving loan of SEK 12,500 million maturing in December 2019
|
|
|
|
Term loan of SEK 6,151 million maturing in December 2020 (amortization of SEK 2,578 million)
|
The
syndicated credit facilities are available provided that Meda meets certain key financial ratios concerning net debt in relation to EBITDA and interest coverage ratio. Meda has met its key financial ratios for 2015.
Liquidity risk
The Groups current liquidity is
covered by a retained liquidity reserve (cash and bank balances, current investments and the unused portion of confirmed credit facilities) that in the long-term shall be at least 5% of the Groups annual sales. On December 31, 2015, the
liquidity reserve was SEK 6,839 million, corresponding to 35% of net sales. The table on pages F-18 and F-19 shows the contractually agreed undiscounted cash flows from the Groups financial liabilities and net settled derivatives that
constitute financial liabilities classified by the time that, on the closing date, remained until the contractually agreed maturity date. For derivatives with a variable interest rate, the variable rate that applied to each derivative on
December 31, 2015 was used for the entire period to maturity.
Credit risk
The Groups financial transactions lead to credit risks in relation to financial counterparties. According to Medas financial policy, financial
transactions may only be conducted with the Groups financing banks, or banks with a high official rating corresponding to Standard & Poors long-term A-rating or better. Investments in cash and cash equivalents can only be made
in -government securities or with banks that have a high official rating.
Credit risk exists in the Groups cash and cash
equivalents, derivatives, and cash balances with banks and financial institutions and in relation to distributors and wholesalers, including outstanding receivables and -committed transactions.
Medas sales are mainly to large, established distributors and whole-salers with robust financial strength in each country. Since sales
occur in several countries and to many different customers, the Group has good risk distribution. Meda monitors granted credits on a continuous basis.
Group assets that entail credit risk are reported in Note 21, 22 and 23.
Capital risk
The goal of the capital structure is to
secure the Groups ability to -continue its operations with the aim of generating return to shareholders and benefit for other stakeholders. The goal is also to keep the costs of capital low, through an optimal capital structure and by that
strengthen Medas ability to meet its key financial ratios. Capital in the Meda Group is judged on the basis of the Groups equity/assets ratio. The Groups long-term goal is an equity/assets ratio of 30%. New shares may be issued to
maintain the capital structure in conjunction with major acquisitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Equity
|
|
|
20,956
|
|
|
|
20,680
|
|
|
|
15,211
|
|
Total assets
|
|
|
60,846
|
|
|
|
65,112
|
|
|
|
36,293
|
|
Equity/assets ratio, %
|
|
|
34.4
|
|
|
|
31.8
|
|
|
|
41.9
|
|
F-20
Note 3 Important estimates and assessments for accounting purposes
Preparation of the financial statements in accordance with IFRS requires management to make assessments, estimates and assumptions which affect the reported
assets and liabilities and other information disclosed in the closing accounts as well as the income and expenses reported during the period. Estimates, assessments and assumptions are evaluated continually and are based on past experience and other
factors, including expectations of future events that are deemed reasonable under prevailing conditions. The actual outcome may differ from these assessments, estimates and assumptions. Below is a description of the most important accounting
policies applied based on assessments and the most important sources of uncertainty in estimates what may have an impact on the Groups reported results and position in future financial years.
Assessments in the application of accounting policies
Acquisitions
When making acquisitions, the Group, based on IFRS
3 Business Combinations, makes assessments as to whether the transaction is a business combination or an acquisition of assets. When a transaction is regarded as a business combination, all identifiable assets and liabilities in the acquired company
are identified and valued at fair value. When the fair value cannot be reliably measured, the value is included in goodwill. When a transaction is regarded as an acquisition of assets, the individually identifiable assets and assumed liabilities are
identified and recognized. The cost of acquisition is allocated to the individual assets and liabilities based on their relative fair values on the acquisition date. An acquisition of assets does not give rise to goodwill.
Legal proceedings
Meda is involved in legal proceedings typical
for the business from time to time. Meda recognizes a liability when an obligation exists and the recognition criteria for provision according to IFRS are met. The Group reviews outstanding legal cases regularly in order to assess the need for
provisions in the financial statements. These reviews consider the factors of the specific case by internal legal counsel and through the use of outside legal counsel and advisors when necessary. To the extent that Group managements assessment
of the factors considered are not reflected in subsequent developments, the financial statements could be affected. As of December 31, 2015, provisions for legal disputes amounted to SEK 254 (73; 66) million, see Note 28. See Note 29
for a description of legal proceedings that Meda is part of and for which the recognition criteria for provisions according to IFRS are not met.
Important sources of uncertainty in estimates
Impairment testing of goodwill
The Group conducts
regular impairment testing of goodwill, as per the principle described in Note 1. Recoverable amounts for cash-generating units were established through measurement of their value in use. Certain estimates must be made in order to arrive at these
measurements as explained in Note 16.
Product rights
The
value of product rights is measured based on certain assumptions. These assumptions relate to forecasts of future sales revenue, contribution margins and expenses for each product. Assumptions are also made on discount rates, product life and
royalty rates. The Groups maximum period of amortization of product rights is 25 years. A need to re-assess the valuation of product rights cannot be ruled out and this may have a major impact on the Groups financial situation and
earnings. The Group conducts regular goodwill impairment tests, as described in Note 1. On December 31, 2015, the value of product rights totaled SEK 21,869 million.
F-21
Pension and similar obligations
Provisions and costs for post-employment benefits, mainly pensions and healthcare benefits, are based on the assumptions made when the amounts are calculated.
Special assumptions and actuarial measurements are made based on estimates of discount rates, healthcare cost trends, inflation, salary increase trends, staff turnover, mortality and other factors. Each change in these assumptions will impact the
carrying amounts of the obligations. The discount rate for each country is established on the basis of the market rate of first-class corporate bonds and takes into account the estimated time to maturity of each obligation. In countries where there
is no functioning market for such bonds, the market rate for government bonds or mortgage bonds is used.
In Sweden, the Group has used
Swedish mortgage bonds to establish the Swedish discount rate. The Swedish mortgage bond market is considered to be first-class (AAA or AA) and liquid, therefore meeting the requirements stipulated in IAS 19. In Germany, the US and the UK, the Group
uses first-class corporate bonds to establish the discount rate.
Inflation assumptions are based on analyzing external market indicators.
Assumptions on salary increase trends reflect expected payroll expense trends. Staff turnover reflects the average long-term staff turn-over within Meda. Mortality is primarily based on official mortality statistics. The Group reviews actuarial
assumptions annually and adjusts them when appropriate. As of December 31, 2015, provisions for pensions amounted to SEK 2,273 million, and assets of SEK 18 million were recognized. Provisions for healthcare benefits amounted to
SEK 94 million. For further information on expenses and assumptions for post-employment benefits, see Note 26 and 28.
Taxes
In the preparation of the financial statements, Meda estimates the income taxes in each of the tax jurisdictions where the Group operates as well as any
deferred taxes based on temporary differences. Deferred tax assets relating mainly to tax loss carry-forwards and temporary differences are recognized in those cases when future taxable income is estimated to be utilized in the various tax
jurisdictions. Changes in assumptions in the projection of future taxable income as well as changes in tax rates could result in significant differences in the valuation of deferred taxes. As of December 31, 2015, Meda recognized deferred tax
assets of SEK 1,812 (1,640; 918) million and deferred tax liabilities of SEK 4,708 (5,278; 2,211) million. For further information on deferred taxes, see Note 17.
Note 4 Segment information
Group management assesses
operations from a geographic perspective. Earnings per geographic area are assessed on the basis of EBITDA (earnings before interest, taxes, depreciation, and amortization). On December 31, 2015, the Group was organized in three geographic
areas: Western Europe, US and Emerging Markets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 SEK million
|
|
Western Europe
|
|
|
US
|
|
|
Emerging
Markets
|
|
|
Other
Sales
|
|
|
Total
|
|
Segments sales
|
|
|
13,612
|
|
|
|
3,421
|
|
|
|
3,739
|
|
|
|
421
|
|
|
|
21,193
|
|
Sales between segments
|
|
|
1,399
|
|
|
|
67
|
|
|
|
79
|
|
|
|
|
|
|
|
1,545
|
|
External net sales
|
|
|
12,213
|
|
|
|
3,354
|
|
|
|
3,660
|
|
|
|
421
|
|
|
|
19,648
|
|
EBITDA
|
|
|
4,247
|
|
|
|
1,432
|
|
|
|
1,281
|
|
|
|
957
|
|
|
|
6,003
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,284
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
|
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,452
|
|
Profit after financial items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,304
|
|
F-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 SEK million
|
|
Western Europe
|
|
|
US
|
|
|
Emerging
Markets
|
|
|
Other
Sales
|
|
|
Total
|
|
Segments sales
|
|
|
11,214
|
|
|
|
2,636
|
|
|
|
2,370
|
|
|
|
235
|
|
|
|
16,455
|
|
Sales between segments
|
|
|
1,009
|
|
|
|
94
|
|
|
|
|
|
|
|
|
|
|
|
1,103
|
|
External net sales
|
|
|
10,205
|
|
|
|
2,542
|
|
|
|
2,370
|
|
|
|
235
|
|
|
|
15,352
|
|
EBITDA
|
|
|
3,327
|
|
|
|
972
|
|
|
|
663
|
|
|
|
972
|
|
|
|
3,990
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,503
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
913
|
|
Profit after financial items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 SEK million
|
|
Western Europe
|
|
|
US
|
|
|
Emerging
Markets
|
|
|
Other
Sales
|
|
|
Total
|
|
Segments sales
|
|
|
9,347
|
|
|
|
2,481
|
|
|
|
1,951
|
|
|
|
202
|
|
|
|
13,981
|
|
Sales between segments
|
|
|
840
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
867
|
|
External net sales
|
|
|
8,507
|
|
|
|
2,454
|
|
|
|
1,951
|
|
|
|
202
|
|
|
|
13,114
|
|
EBITDA
|
|
|
3,078
|
|
|
|
872
|
|
|
|
504
|
|
|
|
720
|
|
|
|
3,734
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,186
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
567
|
|
Profit after financial items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,003
|
|
The company is based in Sweden. Geographic breakdown of total non-current assets other than financial instruments and deferred
tax assets is shown in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
Non-current assets
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Western Europe
1)
|
|
|
12,213
|
|
|
|
10,205
|
|
|
|
8,507
|
|
|
|
28,821
|
|
|
|
31,599
|
|
|
|
15,606
|
|
US
2)
|
|
|
3,354
|
|
|
|
2,542
|
|
|
|
2,454
|
|
|
|
10,066
|
|
|
|
10,302
|
|
|
|
9,592
|
|
Emerging Markets
|
|
|
3,660
|
|
|
|
2,370
|
|
|
|
1,951
|
|
|
|
10,010
|
|
|
|
10,533
|
|
|
|
5,202
|
|
Other Sales
|
|
|
421
|
|
|
|
235
|
|
|
|
202
|
|
|
|
169
|
|
|
|
167
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
19,648
|
|
|
|
15,352
|
|
|
|
13,114
|
|
|
|
49,066
|
|
|
|
52,601
|
|
|
|
30,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
whereof in Sweden
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,818
|
|
|
|
9,667
|
|
|
|
10,925
|
|
2)
whereof in the US
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,066
|
|
|
|
10,302
|
|
|
|
9,592
|
|
A breakdown of goodwill is found in Note 16.
Revenues from external customers in Germany amount to SEK 2,053 million (1,507; 1,374), France SEK 1,594 million (1,415; 1,282), Sweden
SEK 1,427 million (1,409; 1,310) and Italy SEK 1,809 million (1,407; 755). Total revenues from external -customers in other countries amount to SEK 12,765 million (9,614; 8,393).
A breakdown of net sales by income type is found in Note 5.
Geographic areas
Western Europe includes western Europe
excluding the Baltics, Poland, Czech Republic, Slovakia and Hungary. The US comprises the US and Canada, and Emerging Markets includes eastern Europe including the Baltics, Poland, Czech Republic, Slovakia, Hungary, Turkey, the Middle East, Mexico
and other non-European markets. Other Sales concern revenues from contract manufacturing, parts of royalty and other income.
F-23
Note 5 Net sales disclosed by type
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Goods sold
|
|
|
19,037
|
|
|
|
14,796
|
|
|
|
12,553
|
|
Royalties
|
|
|
435
|
|
|
|
361
|
|
|
|
331
|
|
Revenue from contract manufacturing
|
|
|
133
|
|
|
|
145
|
|
|
|
173
|
|
Other
|
|
|
43
|
|
|
|
50
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
19,648
|
|
|
|
15,352
|
|
|
|
13,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 6 Expenses by type
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Changes in stock of finished goods and work in progress
|
|
|
264
|
|
|
|
172
|
|
|
|
82
|
|
Raw materials and consumables
|
|
|
2,315
|
|
|
|
1,900
|
|
|
|
1,457
|
|
Goods for resale
|
|
|
3,063
|
|
|
|
2,376
|
|
|
|
2,205
|
|
Staff costs
|
|
|
3,154
|
|
|
|
2,494
|
|
|
|
1,944
|
|
Depreciation and amortization
|
|
|
3,285
|
|
|
|
2,503
|
|
|
|
2,159
|
|
Other expenses
|
|
|
4,870
|
|
|
|
4,462
|
|
|
|
3,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales, selling expenses, -medicine and business development expenses, and
administrative expenses
|
|
|
16,951
|
|
|
|
13,907
|
|
|
|
11,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-24
Note 7 Personnel, number of employees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
1)2)
|
|
|
2014
3)4)
|
|
|
2013
5)6)
|
|
|
|
Average no. of
employees
7)
|
|
|
Average no. of
employees
7)
|
|
|
Average no. of
employees
7)
|
|
|
|
Women
|
|
|
Men
|
|
|
Women
|
|
|
Men
|
|
|
Women
|
|
|
Men
|
|
Germany
|
|
|
411
|
|
|
|
482
|
|
|
|
399
|
|
|
|
354
|
|
|
|
344
|
|
|
|
316
|
|
France
|
|
|
304
|
|
|
|
198
|
|
|
|
258
|
|
|
|
174
|
|
|
|
227
|
|
|
|
171
|
|
US
|
|
|
251
|
|
|
|
243
|
|
|
|
290
|
|
|
|
256
|
|
|
|
306
|
|
|
|
277
|
|
Italy
|
|
|
229
|
|
|
|
165
|
|
|
|
119
|
|
|
|
67
|
|
|
|
60
|
|
|
|
34
|
|
China
|
|
|
118
|
|
|
|
105
|
|
|
|
56
|
|
|
|
59
|
|
|
|
36
|
|
|
|
51
|
|
Ireland
|
|
|
59
|
|
|
|
124
|
|
|
|
22
|
|
|
|
35
|
|
|
|
5
|
|
|
|
10
|
|
Russia
|
|
|
122
|
|
|
|
41
|
|
|
|
123
|
|
|
|
43
|
|
|
|
100
|
|
|
|
36
|
|
Spain
|
|
|
79
|
|
|
|
55
|
|
|
|
81
|
|
|
|
63
|
|
|
|
58
|
|
|
|
28
|
|
Sweden
|
|
|
72
|
|
|
|
40
|
|
|
|
74
|
|
|
|
36
|
|
|
|
73
|
|
|
|
37
|
|
Turkey
|
|
|
16
|
|
|
|
85
|
|
|
|
23
|
|
|
|
124
|
|
|
|
25
|
|
|
|
126
|
|
Thailand
|
|
|
66
|
|
|
|
21
|
|
|
|
18
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
UK
|
|
|
42
|
|
|
|
37
|
|
|
|
45
|
|
|
|
31
|
|
|
|
38
|
|
|
|
38
|
|
Portugal
|
|
|
40
|
|
|
|
33
|
|
|
|
33
|
|
|
|
29
|
|
|
|
21
|
|
|
|
16
|
|
Belgium
|
|
|
39
|
|
|
|
25
|
|
|
|
30
|
|
|
|
26
|
|
|
|
29
|
|
|
|
27
|
|
Mexico
|
|
|
31
|
|
|
|
32
|
|
|
|
26
|
|
|
|
32
|
|
|
|
27
|
|
|
|
30
|
|
United Arab Emirates
|
|
|
16
|
|
|
|
41
|
|
|
|
14
|
|
|
|
33
|
|
|
|
12
|
|
|
|
32
|
|
Egypt
|
|
|
2
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Netherlands
|
|
|
28
|
|
|
|
15
|
|
|
|
28
|
|
|
|
15
|
|
|
|
24
|
|
|
|
18
|
|
Poland
|
|
|
19
|
|
|
|
24
|
|
|
|
22
|
|
|
|
20
|
|
|
|
25
|
|
|
|
19
|
|
Austria
|
|
|
22
|
|
|
|
20
|
|
|
|
21
|
|
|
|
22
|
|
|
|
15
|
|
|
|
21
|
|
Balkans
|
|
|
24
|
|
|
|
18
|
|
|
|
29
|
|
|
|
14
|
|
|
|
25
|
|
|
|
17
|
|
Ukraine
|
|
|
27
|
|
|
|
11
|
|
|
|
32
|
|
|
|
18
|
|
|
|
31
|
|
|
|
18
|
|
India
|
|
|
4
|
|
|
|
28
|
|
|
|
1
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Denmark
|
|
|
27
|
|
|
|
3
|
|
|
|
24
|
|
|
|
4
|
|
|
|
25
|
|
|
|
5
|
|
Finland
|
|
|
16
|
|
|
|
9
|
|
|
|
15
|
|
|
|
9
|
|
|
|
16
|
|
|
|
14
|
|
South Africa
|
|
|
16
|
|
|
|
8
|
|
|
|
18
|
|
|
|
6
|
|
|
|
13
|
|
|
|
6
|
|
Switzerland
|
|
|
17
|
|
|
|
7
|
|
|
|
16
|
|
|
|
7
|
|
|
|
14
|
|
|
|
6
|
|
Norway
|
|
|
14
|
|
|
|
9
|
|
|
|
14
|
|
|
|
8
|
|
|
|
9
|
|
|
|
12
|
|
CIS
|
|
|
15
|
|
|
|
6
|
|
|
|
18
|
|
|
|
8
|
|
|
|
18
|
|
|
|
10
|
|
Greece
|
|
|
6
|
|
|
|
15
|
|
|
|
5
|
|
|
|
15
|
|
|
|
9
|
|
|
|
11
|
|
Baltics
|
|
|
18
|
|
|
|
2
|
|
|
|
18
|
|
|
|
1
|
|
|
|
19
|
|
|
|
2
|
|
Australia
|
|
|
14
|
|
|
|
5
|
|
|
|
15
|
|
|
|
5
|
|
|
|
3
|
|
|
|
2
|
|
Brazil
|
|
|
8
|
|
|
|
10
|
|
|
|
7
|
|
|
|
3
|
|
|
|
4
|
|
|
|
1
|
|
Czech Republic
|
|
|
11
|
|
|
|
6
|
|
|
|
10
|
|
|
|
5
|
|
|
|
9
|
|
|
|
6
|
|
Slovakia
|
|
|
11
|
|
|
|
6
|
|
|
|
9
|
|
|
|
7
|
|
|
|
9
|
|
|
|
7
|
|
Hungary
|
|
|
11
|
|
|
|
4
|
|
|
|
12
|
|
|
|
4
|
|
|
|
11
|
|
|
|
4
|
|
Belarus
|
|
|
10
|
|
|
|
4
|
|
|
|
8
|
|
|
|
4
|
|
|
|
9
|
|
|
|
4
|
|
Luxembourg
|
|
|
5
|
|
|
|
|
|
|
|
3
|
|
|
|
1
|
|
|
|
3
|
|
|
|
1
|
|
Hong Kong
|
|
|
1
|
|
|
|
3
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Canada
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
2,222
|
|
|
|
1,987
|
|
|
|
1,937
|
|
|
|
1,545
|
|
|
|
1,653
|
|
|
|
1,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,209
|
|
|
|
3,482
|
|
|
|
3,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Full-time equivalents (FTE) on December 31, 2015 were 4,518, whereof 453 contractors.
|
2)
|
Headcount on December 31, 2015 was 4,617, whereof 461 contractors.
|
3)
|
FTEs on December 31, 2014 were 5,083, whereof 511 contractors.
|
F-25
4)
|
Headcount on December 31, 2014 was 5,202, whereof 527 contractors.
|
5)
|
FTEs on December 31, 2013 were 3,226, whereof 164 contractors.
|
6)
|
Headcount on December 31, 2013 was 3,326, whereof 173 contractors.
|
Gender distribution in Meda management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
Women
|
|
|
Men
|
|
|
Women
|
|
|
Men
|
|
|
Women
|
|
|
Men
|
|
Boards
1)
|
|
|
12
|
|
|
|
179
|
|
|
|
10
|
|
|
|
176
|
|
|
|
10
|
|
|
|
92
|
|
CEO and other senior executives
2)
|
|
|
10
|
|
|
|
42
|
|
|
|
8
|
|
|
|
36
|
|
|
|
7
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
22
|
|
|
|
221
|
|
|
|
18
|
|
|
|
212
|
|
|
|
17
|
|
|
|
122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Boards of the Groups operating companies.
|
2)
|
Group management and regional and country/national management.
|
Note 8 Salaries, other remuneration, and
social security costs
Remuneration to the board of directors and senior executives
Board of directors
The chairman and directors of the
board fees are paid as resolved by the annual general meeting (AGM). The CEO does not receive a directors fee. Pursuant to these decisions, directors fees for the period until the next AGM SEK 4,750,000, of which SEK 900,000 is
for the chairmans fee and SEK 650,000 is for the vice chairmans fee. The remaining amount is divided so that each non-executive director receives SEK 400,000. In addition to these amounts, according to the 2015 AGM decision, a
fee totaling SEK 400,000 is paid for serving on the boards audit committee or remuneration committee. The table on page F-19 shows remuneration to the Board of Directors for 2015.
Senior executives
Since the 2015 AGM, the following
guidelines for remuneration to senior executives, as determined by the AGM, have been applied:
The boards proposal for guidelines
for remuneration to senior executives is to reflect Medas need to recruit and motivate qualified employees through a compensation package that is competitive in the various countries. Executive management comprises the CEO and the senior
executives who represent the executive functions that report directly to the CEO.
The principles for remuneration and other employment
terms are based on previously made contracts between Meda and its senior executives. These principles entail the following:
(i)
|
Meda shall seek to offer its senior executives market based -remuneration;
|
(ii)
|
Remuneration criteria shall be based on the significance of their -responsibilities, skills requirements, experience, and performance; and
|
(iii)
|
Remuneration is to consist of the following components:
|
|
|
|
Short-term variable pay
|
|
|
|
Other benefits and severance terms
|
F-26
Distribution between basic salary and variable pay must be in proportion to the executives levels of
responsibility and authority. Short-term variable pay is performance based partly on Group profit and partly on individual qualitative parameters. The variable pay ceiling is 80% of fixed basic salary for the CEO and 50% of fixed basic salary for
other senior executives. Long-term variable pay consists of share related incentive programs. Pension benefits shall reflect current common market terms. Pension based salary is made up of basic salary and variable salary. Other benefits primarily
consist of leasing cars. Other benefits may also include commonly accepted benefits in conjunction with employment or the move abroad of the senior executive. Such benefits may include temporary housing, education fees, moving expenses, tax filing
assistance and similar benefits.
Fixed salary during the period of notice for termination and severance pay shall together not exceed an
amount equivalent to two years of fixed salary.
Remuneration to CEO
The CEOs remuneration consisted of basic salary of SEK 12.5 million and variable pay of SEK 17 million, which includes remuneration related to
the Groups long-term performance based incentive programs in the amount of SEK 2.0 million. Other benefits amounted to SEK 0.4 million. Pension costs amounted to SEK 7.4 million. The CEO chose during the year to convert pension
benefits of SEK 3.0 million to salary. The CEO has a premium based pension plan equal to 35% of fixed salary and variable pay. The pension commitment to the CEO is secured through the purchase of endowment insurance pledged to the benefit of
the CEO. In his previous role as COO, the CEO is covered by a defined benefit pension plan for which the pension commitment at the end of the year amounted to SEK 45 million. No further provision is done to the defined benefit plan since the
end of 2013.
If the CEO resigns or his employment contract is terminated, a mutual period of notice of 12 months applies. If the company
terminates the employment contract, fixed and variable remuneration is payable during the period of notice as well as severance pay equal one time the annual base salary and one time the annual full bonus. Upon closing of a change of control defined
as shareholding by one owner of more than 50% (i) each party must observe a notice period of 24 months which will be reduced pro rata, per each month, during 12 months after closing, until the mutual notice period is yet again 12 months and
(ii) the CEO will receive a payment of two times the annual base salary and two times the annual full bonus. Upon termination, initiated by either party within 3 months from a change of control the CEO will receive an additional payment equal
to two times the annual full bonus payable three months after closing of the change of control. All such payments will be made together with additional pension contribution of 35%. The CEOs total severance payment should not exceed two times
the annual base salary and four times the annual full bonus payment and respective pension.
The CEOs employment terms are
determined by the board of directors.
Executive vice presidents (EVP)
At year end, Medas executive management consisted of eight EVPs, in addition to the CEO. Salary and other remuneration are shown on the next table. All
EVPs are covered by the companys long-term performance based incentive programs.
EVPs employed in Sweden are covered by a premium
based supplementary pension plan. The plan entitles the individuals concerned to a supplement to the pension benefits based on the ITP plan. The premium paid is based upon the individuals pensionable salary (defined as fixed monthly salary
including annual leave supplement). The premium is calculated at 30 percent of pensionable salary in excess of 30 income base amounts. The pension commitment for these individuals is secured through the purchase of endowment insurance pledged to the
benefit of the employee.
F-27
Four EVPs who are not Swedish citizens are covered by a defined benefit pension plan. The pension
commitment for these individuals amounted to SEK 51 million at the end of the year. Other EVPs who are not Swedish -citizens are covered by defined contribution pension plans to which -provisions are made to a maximum of 18% of fixed salary.
Total salaries, social security costs and pensions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
SEK million
|
|
Salaries and
other -
remuneration
|
|
|
Social security
costs
|
|
|
Of which
pension costs
|
|
|
|
|
2,521
|
|
|
|
690
|
|
|
|
177
|
|
Pension costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined contribution plans
|
|
|
|
|
|
|
|
|
|
|
80
|
|
Defined benefit plans
|
|
|
|
|
|
|
|
|
|
|
93
|
|
Defined benefit post-employment healthcare plans
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
SEK million
|
|
Salaries and
other -
remuneration
|
|
|
Social security
costs
|
|
|
Of which
pension costs
|
|
|
|
|
2,020
|
|
|
|
525
|
|
|
|
146
|
|
Pension costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined contribution plans
|
|
|
|
|
|
|
|
|
|
|
74
|
|
Defined benefit plans
|
|
|
|
|
|
|
|
|
|
|
69
|
|
Defined benefit post-employment healthcare plans
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
SEK million
|
|
Salaries and
other -
remuneration
|
|
|
Social security
costs
|
|
|
Of which
pension costs
|
|
|
|
|
1,541
|
|
|
|
446
|
|
|
|
129
|
|
Pension costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined contribution plans
|
|
|
|
|
|
|
|
|
|
|
61
|
|
Defined benefit plans
|
|
|
|
|
|
|
|
|
|
|
65
|
|
Defined benefit post-employment healthcare plans
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and other remuneration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
SEK million
|
|
Salary/board
fee
|
|
|
Of which -
variable
pay
|
|
|
Pension
costs
|
|
|
Average no.
of people
|
|
Board, CEO and other -executives
1)
|
|
|
153
|
|
|
|
60
|
|
|
|
17
|
|
|
|
61
|
|
Other employees
|
|
|
2,368
|
|
|
|
274
|
|
|
|
160
|
|
|
|
4,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,521
|
|
|
|
334
|
|
|
|
177
|
|
|
|
4,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
SEK million
|
|
Salary/board
fee
|
|
|
Of which - variable
pay
|
|
|
Pension
costs
|
|
|
Average no.
of people
|
|
Board, CEO and other - executives
1)
|
|
|
116
|
|
|
|
29
|
|
|
|
10
|
|
|
|
57
|
|
Other employees
|
|
|
1,904
|
|
|
|
222
|
|
|
|
136
|
|
|
|
3,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,020
|
|
|
|
251
|
|
|
|
146
|
|
|
|
3,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
SEK million
|
|
Salary/board
fee
|
|
|
Of which - variable
pay
|
|
|
Pension
costs
|
|
|
Average no.
of people
|
|
Board, CEO and other - executives
1)
|
|
|
113
|
|
|
|
39
|
|
|
|
7
|
|
|
|
44
|
|
Other employees
|
|
|
1,428
|
|
|
|
180
|
|
|
|
122
|
|
|
|
3,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,541
|
|
|
|
219
|
|
|
|
129
|
|
|
|
3,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Board of the parent company, Group management, and regional and country/national management.
|
Basic salary during the period of notice for termination and severance pay shall together not exceed an amount equivalent to two years´
fixed and variable remuneration.
Against the background of a possible change of control, the EVPs participate in a retention program for
2016 which entitles them to receive an additional payment of 18 month base salary in case of completion or of 6 month base salary in case of no completion of a change of control in the year 2016.
Long-term variable pay
Long-term performance based
incentive programs (LTI-programs)
As of December 31, 2015, Meda has two outstanding LTI-programs approved by the AGM in 2014 and 2015. The
programs cover senior -executives and other key employees of the Group. The participants are divided into four groups: the CEO, the EVPs, and two additional groups consisting of country managers and other senior executives. The participants are
given the opportunity to earn allotments of Class A shares in Meda at no cost. The board of directors believes it is advantageous to Meda when key individuals in the Group have a long-term interest in ensuring the good value performance of the
companys stock. The program is also intended to increase the Groups attractiveness as an employer in the global market and promote the ability to recruit and retain key individuals.
Each program will run for three years and shares may be transferred in 2017 and 2018 provided that the individual is employed by the Group for
an indefinite term at the transfer date. Exemptions from the requirement may be permitted in individual cases, such as the participants death, disability, retirement, or sale of the unit by which the participant is employed. In order to set
the participants interest on par with those of shareholders, the participants shall be paid compensation equivalent to the dividends paid during the three year vesting period up to the date of transfer. Compensation will be paid only for
dividends whose distribution was decided after the allotment date.
F-29
As of December 31, 2015, the programs cover, LTI 2014, 83 persons and, LTI 2015, 98 persons.
The allotment of shares according to the programs is determined based on the participants position according to the four groups mentioned and the outcome of three performance criteria regarding 1) net sales, 2) EBITDA margin, and 3) cash flow.
Each performance criterion has been divided into three levels for a total of nine equally weighted levels corresponding to 11.1% per level. The performance criteria have been adjusted for restructuring costs and other items affecting
comparability. The outcome for each program is presented in the following table.
|
|
|
|
|
|
|
|
|
Performance criteria
|
|
LTI 2015level
|
|
|
LTI 2014level
|
|
Net sales
|
|
|
2
|
|
|
|
2
|
|
EBITDA-margin
|
|
|
3
|
|
|
|
2
|
|
Cash flow
|
|
|
3
|
|
|
|
1
|
|
Outcome performance criteria (%)
|
|
|
88.8
|
%
|
|
|
55.5
|
%
|
The number of shares to be allotted to the participants of the LTI 2014 as of December 31, 2015 is presented in the
following table. The number of shares to be allotted to the participants of the LTI 2015 will be based on the market value of the share and determined when the annual report has been adopted by the board of directors and signed by the auditor.
|
|
|
|
|
Alloted shares
|
|
LTI 2014
|
|
Value of shares at allotment (SEK
million)
1)
|
|
|
48
|
|
Number of shares at allotment
2)
|
|
|
350,665
|
|
Additional shares due to dividend compensation
|
|
|
6,844
|
|
Number of forfeited shares during the period
|
|
|
19,388
|
|
|
|
|
|
|
Total allotted shares as of December 31, 2015
|
|
|
338,121
|
|
|
|
|
|
|
1)
|
The value of allotted shares at allotment have been calculated as the volume weighted average share price of Medas class A-shares at Nasdaq Stockholm during ten trading days for the period March 13, 2015 to
March 26, 2015. The program fully compensates for dividends.
|
2)
|
The number of shares is based on a price per share of SEK 136.98.
|
Cost
The total cost of the programs, which is allocated across their duration, is SEK 129 million excluding social security contributions. In 2015, the
programs resulted in a cost recognized in the income statement of SEK 28 million excluding social security contributions of SEK 2 million. The total reserve for social security contributions in the balance sheet amounts to SEK 4
million.
Deliver of shares
The AGM has passed a
resolution allowing the company to meet its obligations to deliver shares under the programs by entering into an equity swap agreement or other comparable agreement with a third party.
Incentive program in the US
The long-term incentive
program that was introduced in 2008 for employees in the US, and adjusted in 2011, expired on December 31, 2015. The incentive program closed at the end of 2011 and included synthetic options. The premium for the options is USD 0, and the
redemption price per option is 100% of the average price paid for the Meda share in January 2011. The total cost recognized in the income statement is SEK 0 million (7; 1).
Preparation and decision process
Issues concerning
remuneration to Group management are dealt with by the remuneration committee in preparation for decisions by the board of directors.
F-30
Remuneration and benefits to board and senior executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 SEK million
|
|
Fixed basic
salary/board
fee
|
|
|
Variable
pay
|
|
|
Performance
share -
programme
|
|
|
Pension
|
|
|
Other -
benefits
|
|
|
Total
|
|
CEO, Jörg-Thomas Dierks
1)
|
|
|
12.5
|
|
|
|
15.0
|
|
|
|
2.0
|
|
|
|
7.4
|
|
|
|
0.4
|
|
|
|
37.3
|
|
Board chairman, Martin Svalstedt
2)
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.0
|
|
Vice chairman, Luca Rovati
2)
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
Board member, Peter Claesson
2)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Board member, Marianne
Hamilton
2)3)4
)
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
Board member, Tuve Johannesson
2)3)
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
Board member, Kimberly
Lein-Mathisen
5)
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Board member, Guido Oelkers
2)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Board member, Karen Sörensen
4)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Board member, Lillie Li Valeur
5)
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Board member, Peter von
Ehrenheim
2)4)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Board member, Lars Westerberg
2)4)
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
Other senior executives (8 persons)
|
|
|
18.2
|
|
|
|
13.4
|
|
|
|
7.1
|
|
|
|
4.2
|
|
|
|
0.9
|
|
|
|
43.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
35.2
|
|
|
|
28.4
|
|
|
|
9.1
|
|
|
|
11.6
|
|
|
|
1.3
|
|
|
|
85.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 SEK million
|
|
Fixed basic
salary/board
fee
|
|
|
Variable
pay
|
|
|
Performance
share -
programme
|
|
|
Pension
|
|
|
Other - benefits
|
|
|
Total
|
|
CEO, Jörg-Thomas Dierks
1)
|
|
|
10.0
|
|
|
|
7.0
|
|
|
|
0.6
|
|
|
|
6.1
|
|
|
|
0.4
|
|
|
|
24.1
|
|
Board chairman, Martin Svalstedt
2)6)
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.6
|
|
Board chairman, Bert-Åke
Eriksson
7)
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Vice chairman, Luca Rovati
8)
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
Board member, Peter Claesson
2)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Board member, Marianne Hamilton
2)4)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Board member, Peter von Ehrenheim
4)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Board member, Tuve Johannesson
2)
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
Board member, Guido Oelkers
6)
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Board member, Lars Westerberg
2)4)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Board member, Karen Sörensen
4)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Other senior executives (8 persons)
|
|
|
14.9
|
|
|
|
7.0
|
|
|
|
1.9
|
|
|
|
3.8
|
|
|
|
0.9
|
|
|
|
28.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
28.8
|
|
|
|
14.0
|
|
|
|
2.5
|
|
|
|
9.9
|
|
|
|
1.3
|
|
|
|
56.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 SEK million
|
|
Fixed basic
salary/board
fee
|
|
|
Variable
pay
|
|
|
Performance
share -
programme
|
|
|
Pension
|
|
|
Other - benefits
|
|
|
Total
|
|
CEO, Jörg-Thomas Dierks
9)
|
|
|
1.0
|
|
|
|
1.1
|
|
|
|
|
|
|
|
0.7
|
|
|
|
0.1
|
|
|
|
2.9
|
|
Former CEO, Anders Lönner
10)
|
|
|
14.3
|
|
|
|
15.0
|
|
|
|
|
|
|
|
11.2
|
|
|
|
0.3
|
|
|
|
40.8
|
|
Board chairman, Bert-Åke
Eriksson
2)
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
Board member, Peter Claesson
2)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Board member, Marianne Hamilton
2)4)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Board member, Peter von Ehrenheim
4)
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Board member, Tuve Johannesson
2)
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
Board member, Lars Westerberg
2)4)
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Board member, Karin Sörensen
4)
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
Other senior executives (12
persons)
11)
|
|
|
11.0
|
|
|
|
4.6
|
|
|
|
|
|
|
|
3.8
|
|
|
|
1.0
|
|
|
|
20.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
29.2
|
|
|
|
20.7
|
|
|
|
|
|
|
|
15.7
|
|
|
|
1.4
|
|
|
|
67.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-31
1)
|
CEO has during the year, in accordance with the employment contract, decided to convert pension of SEK 3 million (2.5) to salary.
|
2)
|
Including received compensation for work in the Board committee.
|
3)
|
Relates to the period January 2015May 2015.
|
4)
|
In addition to this an amount of SEK 0.3 million (0.4; 0.3) corresponding social cost for the part of the invoiced fee.
|
5)
|
Relates to the period May 2015December 2015.
|
6)
|
Relates to the period May 2014December 2014.
|
7)
|
Relates to the period January 2014May 2014.
|
8)
|
Relates to the period November 6 2014December 2014.
|
9)
|
Relates to the period October 2013December 2013.
|
10)
|
Former CEO, Anders Lönner used his right to convert his pension benefit into salary, as per his employment contract.
|
11)
|
Other executives includes Jörg-Thomas Dierks for the period, January 2013September 2013.
|
Note 9
Fees and remuneration to auditors
The table shows the financial years expensed auditing fees and expensed fees for other assignments that the
Groups auditors performed.
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Audit assignment
|
|
|
|
|
|
|
|
|
|
|
|
|
PwC
1)
|
|
|
14
|
|
|
|
13
|
|
|
|
10
|
|
Other
2)
|
|
|
|
|
|
|
3
|
|
|
|
|
|
Tax consulting
|
|
|
|
|
|
|
|
|
|
|
|
|
PwC
|
|
|
2
|
|
|
|
1
|
|
|
|
1
|
|
Other
2)
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
Other services
|
|
|
|
|
|
|
|
|
|
|
|
|
PwC
|
|
|
7
|
|
|
|
12
|
3)
|
|
|
|
|
Other
2)
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
23
|
|
|
|
29
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Auditing fees refer to the statutory audit, i.e. work necessary to issue the auditors report and audit advice given in connection with the audit assignment.
Fees for auditing services other than regular auditing assignments amount to SEK 1 million (3; 0).
|
2)
|
Auditing fees, tax consulting and other service to other auditors for 2014 refer to statutory audit and consulting fees for acquired Rottapharm entities.
|
3)
|
Fees for work performed by PwC firms globally, and invoiced to the parent company Meda AB.
|
Note 10 Operating leases
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Leasing expensed during the financial year
|
|
|
249
|
|
|
|
238
|
|
|
|
166
|
|
|
|
|
|
The nominal value of future minimum lease -payments regarding non-cancelable leases is distributed
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable within 1 year
|
|
|
215
|
|
|
|
209
|
|
|
|
122
|
|
Payable within 15 years
|
|
|
467
|
|
|
|
387
|
|
|
|
202
|
|
Payable after 5 years
|
|
|
58
|
|
|
|
13
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
740
|
|
|
|
609
|
|
|
|
331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-32
The largest portion of the lease payments is for rent of premises and cars for sales representatives. The
Groups largest lease contracts are in Germany, Italy, US, France, UK and Sweden. An operating lease covering office rent in Bad Homburg, Germany expires in 2019. Lease contracts for office premises in Monza, Italy and factory premises in
Confienza, Italy expire in 2020. In the US, the lease for offices runs through 2021. In 2015, Meda signed a new office lease in France which runs from July 1, 2016 to July 1, 2022. In the UK, Meda has leases for offices running until 2018.
A new office lease in Sweden was signed during the year and it expires in June 2020.
The Groups leasing contracts for company cars
usually run for 34 years.
Note 11 Exchange gains/losses, net
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Finance income/costs (see Note 12)
|
|
|
16
|
|
|
|
34
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
16
|
|
|
|
34
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 12 Finance income and finance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
37
|
|
|
|
8
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total finance income
|
|
|
37
|
|
|
|
8
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
1,067
|
|
|
|
591
|
|
|
|
456
|
|
Exchange losses (see Note 11)
|
|
|
16
|
|
|
|
34
|
|
|
|
42
|
|
Costs of raising loans
|
|
|
115
|
1)
|
|
|
192
|
|
|
|
43
|
|
Interestpensions
|
|
|
57
|
|
|
|
50
|
|
|
|
|
|
Other finance costs
|
|
|
197
|
1)
|
|
|
46
|
2)
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total finance costs
|
|
|
1,452
|
|
|
|
913
|
|
|
|
567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Including expenses of SEK 219 million related to redemption of the bond loan absorbed in conjunction with the acquisition of Rottapharm, which was repaid in late
April 2015.
|
2)
|
Including transactional tax of SEK 36 million for the acquisition of the shares in Rottapharm.
|
Note 13 Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Current tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax for the year
|
|
|
1,039
|
|
|
|
462
|
|
|
|
450
|
|
Current tax attributable to prior years
|
|
|
236
|
|
|
|
8
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
803
|
|
|
|
470
|
|
|
|
424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax (see Note 17)
|
|
|
691
|
|
|
|
290
|
|
|
|
226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
112
|
|
|
|
180
|
|
|
|
198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense constituted 8.6% (30.9;19.8) of profit before tax. The difference between the recognized tax expense and the
consolidated profit before tax calculated using the Swedish tax rate of 22.0% (22.0; 22.0) is illustrated in the table below. The tax expense was positively impacted by SEK 359 million due to restructuring costs and
F-33
other items affecting comparability and the use of a non-capitalized loss carry forward in Germany. The Groups tax expense was SEK 471 million (351; 198), corresponding to a tax rate
of 23.5% (22.9; 19.8).
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Reconciliation of effective tax
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax
|
|
|
1,304
|
|
|
|
582
|
|
|
|
1,003
|
|
Tax as per applicable tax rate for parent company, %
|
|
|
22.0
|
|
|
|
22.0
|
|
|
|
22.0
|
|
Effect of other tax rates for foreign -subsidiaries, %
|
|
|
3.7
|
|
|
|
6.6
|
|
|
|
3.7
|
|
Internal restructuring of subsidiaries, %
|
|
|
0.3
|
|
|
|
3.6
|
|
|
|
|
|
Other non-deductible expenses, %
|
|
|
5.5
|
|
|
|
3.6
|
|
|
|
3.6
|
|
Effect of changed tax rates, %
|
|
|
0.7
|
|
|
|
1.9
|
|
|
|
0.0
|
|
Tax attributable to prior years, %
|
|
|
15.6
|
|
|
|
6.4
|
|
|
|
2.1
|
|
Recognized effective tax, %
|
|
|
8.6
|
|
|
|
30.9
|
|
|
|
19.8
|
|
Note 14 Earnings per share
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Profit attributable to parent company-shareholders, SEK million
|
|
|
1,176
|
|
|
|
399
|
|
|
|
807
|
|
Average no. of shares (thousands)
|
|
|
365,467
|
|
|
|
323,397
|
|
|
|
313,672
|
|
No. of shares in calculation of basic -earnings per share (thousands)
|
|
|
365,467
|
|
|
|
323,397
|
|
|
|
313,672
|
|
Basic earnings per share (SEK)
|
|
|
3.22
|
|
|
|
1.23
|
|
|
|
2.57
|
|
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Profit attributable to parent company-shareholders, SEK million
|
|
|
1,176
|
|
|
|
399
|
|
|
|
807
|
|
Average no. of shares (thousands)
|
|
|
365,467
|
|
|
|
323,397
|
|
|
|
313,672
|
|
No. of shares in calculation of diluted -earnings per share (thousands)
|
|
|
365,467
|
|
|
|
323,397
|
|
|
|
313,672
|
|
Diluted earnings per share (SEK)
|
|
|
3.22
|
|
|
|
1.23
|
|
|
|
2.57
|
|
Basic and diluted earnings per share
Calculation of earnings per share was based on net profit for the year after tax attributable to parent company shareholders in relation to a weighted -average
number of outstanding shares totaling 365,467,371 (323,396,680; 313,671,718). For 2013 and 2014, the number of shares has been adjusted to consider the bonus issue element in the 2014 new share issue. There are no potential diluted ordinary shares.
F-34
Note 15 Tangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
SEK million
|
|
Buildings and land
|
|
|
Machinery/plant
|
|
|
Equipment and-
installations
|
|
|
Construction
in progress
|
|
|
Total
|
|
Opening cost of acquisition
|
|
|
994
|
|
|
|
1,367
|
|
|
|
722
|
|
|
|
113
|
|
|
|
3,196
|
|
Investments
|
|
|
8
|
|
|
|
80
|
|
|
|
48
|
|
|
|
84
|
|
|
|
220
|
|
Sales/disposals
|
|
|
16
|
|
|
|
26
|
|
|
|
69
|
|
|
|
|
|
|
|
111
|
|
Divested operation
|
|
|
40
|
|
|
|
320
|
|
|
|
19
|
|
|
|
1
|
|
|
|
380
|
|
Reclassification
|
|
|
31
|
|
|
|
91
|
|
|
|
38
|
|
|
|
129
|
|
|
|
45
|
|
Translation difference
|
|
|
8
|
|
|
|
8
|
|
|
|
6
|
|
|
|
1
|
|
|
|
11
|
|
Closing cost of acquisition
|
|
|
969
|
|
|
|
1,184
|
|
|
|
650
|
|
|
|
66
|
|
|
|
2,869
|
|
Opening depreciation
|
|
|
363
|
|
|
|
649
|
|
|
|
492
|
|
|
|
|
|
|
|
1,504
|
|
Years depreciation
|
|
|
31
|
|
|
|
116
|
|
|
|
64
|
|
|
|
|
|
|
|
211
|
|
Sales/disposals
|
|
|
15
|
|
|
|
24
|
|
|
|
65
|
|
|
|
|
|
|
|
104
|
|
Divested operation
|
|
|
21
|
|
|
|
204
|
|
|
|
16
|
|
|
|
|
|
|
|
241
|
|
Reclassification
|
|
|
3
|
|
|
|
4
|
|
|
|
13
|
|
|
|
|
|
|
|
14
|
|
Translation difference
|
|
|
1
|
|
|
|
1
|
|
|
|
9
|
|
|
|
|
|
|
|
9
|
|
Closing depreciation
|
|
|
362
|
|
|
|
532
|
|
|
|
471
|
|
|
|
|
|
|
|
1,365
|
|
Carrying amount at year-end
|
|
|
607
|
|
|
|
652
|
|
|
|
179
|
|
|
|
66
|
|
|
|
1,504
|
|
Depreciation per function:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
18
|
|
|
|
105
|
|
|
|
16
|
|
|
|
|
|
|
|
139
|
|
Selling expenses
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
7
|
|
Medicine and business - development expenses
|
|
|
1
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
4
|
|
Administrative expenses
|
|
|
12
|
|
|
|
11
|
|
|
|
38
|
|
|
|
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
31
|
|
|
|
116
|
|
|
|
64
|
|
|
|
|
|
|
|
211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
SEK million
|
|
Buildings and land
|
|
|
Machinery/plant
|
|
|
Equipment and-
installations
|
|
|
Construction
in progress
|
|
|
Total
|
|
Opening cost of acquisition
|
|
|
691
|
|
|
|
826
|
|
|
|
561
|
|
|
|
92
|
|
|
|
2,170
|
|
Investments
|
|
|
11
|
|
|
|
42
|
|
|
|
22
|
|
|
|
41
|
|
|
|
116
|
|
Sales/disposals
|
|
|
45
|
|
|
|
34
|
|
|
|
54
|
|
|
|
|
|
|
|
133
|
|
Acquired operation
|
|
|
262
|
|
|
|
382
|
|
|
|
115
|
|
|
|
73
|
|
|
|
832
|
|
Reclassification
|
|
|
11
|
|
|
|
69
|
|
|
|
20
|
|
|
|
100
|
|
|
|
0
|
|
Translation difference
|
|
|
64
|
|
|
|
82
|
|
|
|
58
|
|
|
|
7
|
|
|
|
211
|
|
Closing cost of acquisition
|
|
|
994
|
|
|
|
1,367
|
|
|
|
722
|
|
|
|
113
|
|
|
|
3,196
|
|
Opening depreciation
|
|
|
319
|
|
|
|
564
|
|
|
|
439
|
|
|
|
|
|
|
|
1,322
|
|
Years depreciation
|
|
|
23
|
|
|
|
63
|
|
|
|
47
|
|
|
|
|
|
|
|
133
|
|
Sales/disposals
|
|
|
7
|
|
|
|
26
|
|
|
|
41
|
|
|
|
|
|
|
|
74
|
|
Translation difference
|
|
|
28
|
|
|
|
48
|
|
|
|
47
|
|
|
|
|
|
|
|
123
|
|
Closing depreciation
|
|
|
363
|
|
|
|
649
|
|
|
|
492
|
|
|
|
|
|
|
|
1,504
|
|
Carrying amount at year- end
|
|
|
631
|
|
|
|
718
|
|
|
|
230
|
|
|
|
113
|
|
|
|
1,692
|
|
Depreciation per function:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
10
|
|
|
|
53
|
|
|
|
15
|
|
|
|
|
|
|
|
78
|
|
Selling expenses
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
6
|
|
Medicine and business - development expenses
|
|
|
1
|
|
|
|
1
|
|
|
|
6
|
|
|
|
|
|
|
|
8
|
|
Administrative expenses
|
|
|
12
|
|
|
|
9
|
|
|
|
20
|
|
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
23
|
|
|
|
63
|
|
|
|
47
|
|
|
|
|
|
|
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
SEK million
|
|
Buildings and land
|
|
|
Machinery/plant
|
|
|
Equipment and-
installations
|
|
|
Construction
in progress
|
|
|
Total
|
|
Opening cost of acquisition
|
|
|
663
|
|
|
|
797
|
|
|
|
534
|
|
|
|
55
|
|
|
|
2,049
|
|
Investments
|
|
|
12
|
|
|
|
31
|
|
|
|
25
|
|
|
|
68
|
|
|
|
136
|
|
Sales/disposals
|
|
|
|
|
|
|
50
|
|
|
|
9
|
|
|
|
|
|
|
|
59
|
|
Reclassification
|
|
|
1
|
|
|
|
28
|
|
|
|
3
|
|
|
|
32
|
|
|
|
0
|
|
Translation difference
|
|
|
15
|
|
|
|
20
|
|
|
|
8
|
|
|
|
1
|
|
|
|
44
|
|
Closing cost of acquisition
|
|
|
691
|
|
|
|
826
|
|
|
|
561
|
|
|
|
92
|
|
|
|
2,170
|
|
Opening depreciation
|
|
|
298
|
|
|
|
550
|
|
|
|
406
|
|
|
|
|
|
|
|
1,254
|
|
Years depreciation
|
|
|
16
|
|
|
|
48
|
|
|
|
36
|
|
|
|
|
|
|
|
100
|
|
Sales/disposals
|
|
|
|
|
|
|
50
|
|
|
|
9
|
|
|
|
|
|
|
|
59
|
|
Reclassification
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
0
|
|
Translation difference
|
|
|
5
|
|
|
|
15
|
|
|
|
7
|
|
|
|
|
|
|
|
27
|
|
Closing depreciation
|
|
|
319
|
|
|
|
564
|
|
|
|
439
|
|
|
|
|
|
|
|
1,322
|
|
Carrying amount at year-end
|
|
|
372
|
|
|
|
262
|
|
|
|
122
|
|
|
|
92
|
|
|
|
848
|
|
Depreciation per function:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
8
|
|
|
|
37
|
|
|
|
10
|
|
|
|
|
|
|
|
55
|
|
Selling expenses
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
6
|
|
Medicine and business -development expenses
|
|
|
1
|
|
|
|
1
|
|
|
|
3
|
|
|
|
|
|
|
|
5
|
|
Administrative expenses
|
|
|
7
|
|
|
|
10
|
|
|
|
17
|
|
|
|
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
16
|
|
|
|
48
|
|
|
|
36
|
|
|
|
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance leases
The
Groups property, plant, and equipment include objects held via finance leases as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Opening cost of acquisition
|
|
|
33
|
|
|
|
50
|
|
|
|
91
|
|
Sales/disposals
|
|
|
|
|
|
|
|
|
|
|
41
|
|
Acquired operation
|
|
|
|
|
|
|
33
|
|
|
|
|
|
Divested operation
|
|
|
32
|
|
|
|
|
|
|
|
|
|
Reclassification
|
|
|
|
|
|
|
50
|
|
|
|
|
|
Translation difference
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Closing cost of acquisition
|
|
|
1
|
|
|
|
33
|
|
|
|
50
|
|
Opening depreciation
|
|
|
1
|
|
|
|
25
|
|
|
|
56
|
|
Years depreciation
|
|
|
4
|
|
|
|
3
|
|
|
|
10
|
|
Sales/disposals
|
|
|
|
|
|
|
|
|
|
|
41
|
|
Divested operation
|
|
|
4
|
|
|
|
|
|
|
|
|
|
Reclassification
|
|
|
|
|
|
|
27
|
|
|
|
|
|
Translation difference
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Closing depreciation
|
|
|
1
|
|
|
|
1
|
|
|
|
25
|
|
Carrying amount at year-end
|
|
|
0
|
|
|
|
32
|
|
|
|
25
|
|
Future minimum lease payments have these due dates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominal values
|
|
|
Present values
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
01 year
|
|
|
0
|
|
|
|
5
|
|
|
|
2
|
|
|
|
0
|
|
|
|
5
|
|
|
|
2
|
|
15 years
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
0
|
|
|
|
22
|
|
|
|
2
|
|
|
|
0
|
|
|
|
22
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-36
Note 16 Intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
SEK million
|
|
Goodwill
|
|
|
Product rights
|
|
|
Other assets
1)
|
|
|
Total
|
|
Opening cost of acquisition
|
|
|
25,352
|
|
|
|
40,083
|
|
|
|
232
|
|
|
|
65,667
|
|
Investments
|
|
|
47
|
|
|
|
59
|
|
|
|
20
|
|
|
|
126
|
|
Sales/disposals
|
|
|
|
|
|
|
6
|
|
|
|
14
|
|
|
|
20
|
|
Divested operation
|
|
|
|
|
|
|
511
|
|
|
|
7
|
|
|
|
518
|
|
Reclassification
|
|
|
|
|
|
|
1
|
|
|
|
46
|
|
|
|
45
|
|
Translation difference
|
|
|
125
|
|
|
|
98
|
|
|
|
9
|
|
|
|
214
|
|
Closing cost of acquisition
|
|
|
25,524
|
|
|
|
39,722
|
|
|
|
268
|
|
|
|
65,514
|
|
Opening amortization
|
|
|
|
|
|
|
14,715
|
|
|
|
154
|
|
|
|
14,869
|
|
Amortization for the year
|
|
|
|
|
|
|
3,040
|
|
|
|
33
|
|
|
|
3,073
|
|
Sales/disposals
|
|
|
|
|
|
|
5
|
|
|
|
7
|
|
|
|
12
|
|
Divested operation
|
|
|
|
|
|
|
42
|
|
|
|
4
|
|
|
|
46
|
|
Reclassification
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
14
|
|
Translation difference
|
|
|
|
|
|
|
145
|
|
|
|
7
|
|
|
|
138
|
|
Closing amortization
|
|
|
|
|
|
|
17,853
|
|
|
|
183
|
|
|
|
18,036
|
|
Carrying amount at year-end
|
|
|
25,524
|
|
|
|
21,869
|
|
|
|
85
|
|
|
|
47,478
|
|
|
|
|
|
|
Amortization per function:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
8
|
|
Selling expenses
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
4
|
|
Medicine and business development expenses
|
|
|
|
|
|
|
3,040
|
|
|
|
5
|
|
|
|
3,045
|
|
Administrative expenses
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
3,040
|
|
|
|
33
|
|
|
|
3,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Mainly refer to software.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
SEK million
|
|
Goodwill
|
|
|
Product rights
|
|
|
Other assets
1)
|
|
|
Total
|
|
Opening cost of acquisition
|
|
|
13,971
|
|
|
|
27,352
|
|
|
|
171
|
|
|
|
41,494
|
|
Investments
|
|
|
|
|
|
|
12
|
|
|
|
26
|
|
|
|
38
|
|
Sales/disposals
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
Acquired operation
|
|
|
9,758
|
|
|
|
11,077
|
|
|
|
20
|
|
|
|
20,855
|
|
Divested operation
|
|
|
|
|
|
|
96
|
|
|
|
|
|
|
|
96
|
|
Translation difference
|
|
|
1,623
|
|
|
|
1,738
|
|
|
|
16
|
|
|
|
3,377
|
|
Closing cost of acquisition
|
|
|
25,352
|
|
|
|
40,083
|
|
|
|
232
|
|
|
|
65,667
|
|
Opening amortization
|
|
|
|
|
|
|
11,710
|
|
|
|
118
|
|
|
|
11,828
|
|
Amortization for the year
|
|
|
|
|
|
|
2,348
|
|
|
|
22
|
|
|
|
2,370
|
|
Sales/disposals
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
Divested operation
|
|
|
|
|
|
|
26
|
|
|
|
|
|
|
|
26
|
|
Translation difference
|
|
|
|
|
|
|
683
|
|
|
|
15
|
|
|
|
698
|
|
Closing amortization
|
|
|
|
|
|
|
14,715
|
|
|
|
154
|
|
|
|
14,869
|
|
Carrying amount at year-end
|
|
|
25,352
|
|
|
|
25,368
|
|
|
|
78
|
|
|
|
50,798
|
|
|
|
|
|
|
Amortization per function:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
Selling expenses
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
4
|
|
Medicine and business development expenses
|
|
|
|
|
|
|
2,348
|
|
|
|
5
|
|
|
|
2,353
|
|
Administrative expenses
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
2,348
|
|
|
|
22
|
|
|
|
2,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Mainly refer to software.
|
F-37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
SEK million
|
|
Goodwill
|
|
|
Product rights
|
|
|
Other assets
1)
|
|
|
Total
|
|
Opening cost of acquisition
|
|
|
13,809
|
|
|
|
26,167
|
|
|
|
144
|
|
|
|
40,120
|
|
Investments
|
|
|
|
|
|
|
236
|
|
|
|
25
|
|
|
|
261
|
|
Sales/disposals
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
12
|
|
Acquired operation
|
|
|
|
|
|
|
782
|
|
|
|
|
|
|
|
782
|
|
Translation difference
|
|
|
162
|
|
|
|
179
|
|
|
|
2
|
|
|
|
343
|
|
Closing cost of acquisition
|
|
|
13,971
|
|
|
|
27,352
|
|
|
|
171
|
|
|
|
41,494
|
|
Opening amortization
|
|
|
|
|
|
|
9,604
|
|
|
|
97
|
|
|
|
9,701
|
|
Amortization for the year
|
|
|
|
|
|
|
2,067
|
|
|
|
19
|
|
|
|
2,086
|
|
Sales/disposals
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
12
|
|
Translation difference
|
|
|
|
|
|
|
51
|
|
|
|
2
|
|
|
|
53
|
|
Closing amortization
|
|
|
|
|
|
|
11,710
|
|
|
|
118
|
|
|
|
11,828
|
|
Carrying amount at year-end
|
|
|
13,971
|
|
|
|
15,642
|
|
|
|
53
|
|
|
|
29,666
|
|
|
|
|
|
|
Amortization per function:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
Selling expenses
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
Medicine and business development expenses
|
|
|
|
|
|
|
2,067
|
|
|
|
4
|
|
|
|
2,071
|
|
Administrative expenses
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
2,067
|
|
|
|
19
|
|
|
|
2,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Mainly refer to software.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specification of major-product rights, SEK million
|
|
2015
|
|
|
Rate of
amortization,
years
|
|
|
Remaining
amortization,
years
|
|
Dona
|
|
|
2,727
|
|
|
|
15
|
|
|
|
13.8
|
|
Elidel
|
|
|
1,654
|
|
|
|
15
|
|
|
|
10.2
|
|
3M-products
|
|
|
1,472
|
|
|
|
15
|
|
|
|
6.0
|
|
Saugella
|
|
|
950
|
|
|
|
15
|
|
|
|
13.8
|
|
Valeant products
|
|
|
848
|
|
|
|
15
|
|
|
|
7.7
|
|
Alaven products
|
|
|
818
|
|
|
|
15
|
|
|
|
9.7
|
|
Recip products
|
|
|
787
|
|
|
|
15
|
|
|
|
6.9
|
|
Antula products
|
|
|
738
|
|
|
|
25
|
|
|
|
20.3
|
|
Treo
|
|
|
629
|
|
|
|
25
|
|
|
|
20.8
|
|
Jazz
|
|
|
537
|
|
|
|
15
|
|
|
|
11.9
|
|
Other
|
|
|
10,709
|
|
|
|
1025
|
|
|
|
8.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
21,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-38
Impairment testing of goodwill
The next table shows the carrying amount for goodwill distributed per cashgenerating unit (CGU). Goodwill was tested for impairment regarding the US
(acquisitions of MedPointe and Alaven), the Nordics (acquisitions of Recip and Antula), Western Europe excluding Nordics (acquisitions of Viatris, 3M, Valeant and Rottapharm) and Emerging Markets (acquisition of Rottapharm).
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
US
|
|
|
5,997
|
|
|
|
5,497
|
|
|
|
4,564
|
|
Nordics
|
|
|
2,108
|
|
|
|
2,113
|
|
|
|
2,110
|
|
Western Europe excluding Nordics
|
|
|
12,653
|
|
|
|
12,888
|
|
|
|
7,297
|
|
Emerging Markets
|
|
|
4,766
|
|
|
|
4,854
|
|
|
|
|
|
Total
|
|
|
25,524
|
|
|
|
25,352
|
|
|
|
13,971
|
|
The recoverable amounts of the CGUs are based on value in use. These calculations originate from estimated cash flows based on
management approved financial budgets and cover a four-year period. Management established the financial budgets based on previous results, experience and expectations of market trend.
The budgets are based on growth rate, gross margin and discount rate. The growth rate includes assumptions about product launches of existing
products in new markets, price developments, sales volumes and competing products estimated development, while gross margin includes assumptions about sales and cost of sales.
Cash flow beyond the four-year period has been assumed to have annual growth of 2%. This anticipated growth rate is a moderate assumption in
relation to estimated long-term growth rate for the total market. According to IMS (IMS Health Market Prognosis, September 2015), the global pharmaceutical market is expected to increase by an average of 47% annually during the 20162020
period.
Average budgeted gross margin, growth rate beyond the four-year period and discount rate before tax used in the calculation of
value in use are shown in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015, Parameter, %
|
|
US
|
|
|
Nordics
|
|
|
Western
Europe
excluding
Nordics
|
|
|
Emerging
Markets
|
|
Average budgeted gross margin
|
|
|
75
|
|
|
|
58
|
|
|
|
62
|
|
|
|
62
|
|
Growth rate beyond the four-year period
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
Discount rate, before tax
|
|
|
13
|
|
|
|
11
|
|
|
|
12
|
|
|
|
12
|
|
2014, Parameter, %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average budgeted gross margin
|
|
|
77
|
|
|
|
58
|
|
|
|
61
|
|
|
|
61
|
|
Growth rate beyond the four-year period
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
Discount rate, before tax
|
|
|
13
|
|
|
|
11
|
|
|
|
12
|
|
|
|
12
|
|
2013, Parameter, %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average budgeted gross margin
|
|
|
78
|
|
|
|
57
|
|
|
|
60
|
|
|
|
|
|
Growth rate beyond the four-year period
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
Discount rate, before tax
|
|
|
13
|
|
|
|
11
|
|
|
|
12
|
|
|
|
|
|
Meda estimates that the applied discount rate is conservative because the weighted average cost of capital is lower than the
discount rate. As the recoverable amount for the tested entities exceeds the carrying amount, no impairment loss was recognized.
Meda
performed sensitivity analyses on the parameters growth rate, gross margin and discount rate and states that there are good margins in the calculations for the Nordic region, Western Europe and Emerging Markets. For US, the recoverable amount
exceeds its carrying amount with SEK 740 million at December 31,
F-39
2015. The recoverable amount would equal its carrying amount if the growth rate beyond the four-year period decreased from 2% to 0.6%. Meda has assessed that reasonable change to the other
parameters would not cause the carrying amount to exceed its recoverable amount. In the long-term, Medas ability to generate future deals constitutes a key factor in justifying recognized goodwill.
Note 17 Deferred tax
Amounts referring to deferred tax
assets and deferred tax liabilities on the balance sheet include:
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets to be used after 12 months
|
|
|
892
|
|
|
|
842
|
|
|
|
362
|
|
Deferred tax assets to be used within 12 months
|
|
|
920
|
|
|
|
798
|
|
|
|
556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,812
|
|
|
|
1,640
|
|
|
|
918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities payable after 12 months
|
|
|
4,198
|
|
|
|
4,759
|
|
|
|
1,919
|
|
Deferred tax liabilities payable within 12 months
|
|
|
510
|
|
|
|
519
|
|
|
|
292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,708
|
|
|
|
5,278
|
|
|
|
2,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carry-forward of unused tax losses:
At year-end 2015, the Group reported deferred tax assets attributable to carry-forwards of unused tax losses of SEK 137 million, mainly related to
Portugal, Spain, Sweden and USA. The tax base of loss carryforwards not accounted for is SEK 50 million, mainly attributable to Spain and Portugal. The decision not to account for the loss carry-forwards is based on the uncertainty to be
able to use them. Deferred tax assets and tax liabilities on the balance sheet refer to the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
SEK million
|
|
Receivables
|
|
|
Liabilities
|
|
|
Net
|
|
|
Receivables
|
|
|
Liabilities
|
|
|
Net
|
|
|
Receivables
|
|
|
Liabilities
|
|
|
Net
|
|
Intangible non-current assets
|
|
|
109
|
|
|
|
4,268
|
|
|
|
-4,159
|
|
|
|
107
|
|
|
|
4,829
|
|
|
|
-4,722
|
|
|
|
72
|
|
|
|
1,558
|
|
|
|
-1,486
|
|
Property, plant, and equipment
|
|
|
3
|
|
|
|
60
|
|
|
|
-57
|
|
|
|
49
|
|
|
|
85
|
|
|
|
-36
|
|
|
|
4
|
|
|
|
64
|
|
|
|
-60
|
|
Stock (inventories)
|
|
|
420
|
|
|
|
5
|
|
|
|
415
|
|
|
|
296
|
|
|
|
5
|
|
|
|
291
|
|
|
|
260
|
|
|
|
5
|
|
|
|
255
|
|
Accrued expenses
|
|
|
698
|
|
|
|
72
|
|
|
|
626
|
|
|
|
526
|
|
|
|
23
|
|
|
|
503
|
|
|
|
317
|
|
|
|
125
|
|
|
|
192
|
|
Loss carry-forwards
|
|
|
137
|
|
|
|
0
|
|
|
|
137
|
|
|
|
190
|
|
|
|
0
|
|
|
|
190
|
|
|
|
84
|
|
|
|
0
|
|
|
|
84
|
|
Pensions
|
|
|
474
|
|
|
|
8
|
|
|
|
466
|
|
|
|
494
|
|
|
|
7
|
|
|
|
487
|
|
|
|
204
|
|
|
|
5
|
|
|
|
199
|
|
Untaxed reserves
|
|
|
0
|
|
|
|
333
|
|
|
|
-333
|
|
|
|
0
|
|
|
|
369
|
|
|
|
-369
|
|
|
|
0
|
|
|
|
492
|
|
|
|
-492
|
|
Other
|
|
|
15
|
|
|
|
6
|
|
|
|
9
|
|
|
|
20
|
|
|
|
2
|
|
|
|
18
|
|
|
|
18
|
|
|
|
3
|
|
|
|
15
|
|
Deferred tax assets and tax liabilities
|
|
|
1,856
|
|
|
|
4,752
|
|
|
|
-2,896
|
|
|
|
1,682
|
|
|
|
5,320
|
|
|
|
-3,638
|
|
|
|
959
|
|
|
|
2,252
|
|
|
|
-1,293
|
|
Offsetting of assets and liabilities
|
|
|
-44
|
|
|
|
-44
|
|
|
|
0
|
|
|
|
-42
|
|
|
|
-42
|
|
|
|
0
|
|
|
|
-41
|
|
|
|
-41
|
|
|
|
0
|
|
Tax assets and tax liabilities, net
|
|
|
1,812
|
|
|
|
4,708
|
|
|
|
-2,896
|
|
|
|
1,640
|
|
|
|
5,278
|
|
|
|
-3,638
|
|
|
|
918
|
|
|
|
2,211
|
|
|
|
-1,293
|
|
F-40
Change regarding deferred taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
Intangible
non-current
assets
|
|
|
Property,
plant, and
equipment
|
|
|
Stock
(inven-
tories)
|
|
|
Accrued
expenses
|
|
|
Loss
carry-
forwards
|
|
|
Pensions
|
|
|
Un-
taxed
reserves
|
|
|
Other
|
|
|
Total
|
|
January 1, 2013
|
|
|
1,634
|
|
|
|
67
|
|
|
|
252
|
|
|
|
56
|
|
|
|
12
|
|
|
|
278
|
|
|
|
510
|
|
|
|
7
|
|
|
|
1,606
|
|
Translation difference
|
|
|
7
|
|
|
|
1
|
|
|
|
1
|
|
|
|
3
|
|
|
|
0
|
|
|
|
8
|
|
|
|
0
|
|
|
|
2
|
|
|
|
10
|
|
Acquired operation
|
|
|
8
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3
|
|
|
|
77
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2
|
|
|
|
90
|
|
Recognition in income statement
|
|
|
147
|
|
|
|
8
|
|
|
|
2
|
|
|
|
57
|
|
|
|
5
|
|
|
|
5
|
|
|
|
18
|
|
|
|
4
|
|
|
|
226
|
|
Tax recognized in other - comprehensive income
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
73
|
|
|
|
0
|
|
|
|
66
|
|
|
|
0
|
|
|
|
0
|
|
|
|
7
|
|
December 31, 2013
|
|
|
1,486
|
|
|
|
60
|
|
|
|
255
|
|
|
|
192
|
|
|
|
84
|
|
|
|
199
|
|
|
|
492
|
|
|
|
15
|
|
|
|
1,293
|
|
January 1, 2014
|
|
|
1,486
|
|
|
|
60
|
|
|
|
255
|
|
|
|
192
|
|
|
|
84
|
|
|
|
199
|
|
|
|
492
|
|
|
|
15
|
|
|
|
1,293
|
|
Translation difference
|
|
|
200
|
|
|
|
0
|
|
|
|
6
|
|
|
|
29
|
|
|
|
14
|
|
|
|
6
|
|
|
|
0
|
|
|
|
2
|
|
|
|
147
|
|
Acquired operation
|
|
|
3,250
|
|
|
|
11
|
|
|
|
36
|
|
|
|
47
|
|
|
|
88
|
|
|
|
146
|
|
|
|
0
|
|
|
|
5
|
|
|
|
2,919
|
|
Recognition in income statement
|
|
|
214
|
|
|
|
13
|
|
|
|
6
|
|
|
|
47
|
|
|
|
4
|
|
|
|
12
|
|
|
|
123
|
|
|
|
1
|
|
|
|
290
|
|
Tax recognized in other - comprehensive income
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
283
|
|
|
|
0
|
|
|
|
149
|
|
|
|
0
|
|
|
|
0
|
|
|
|
432
|
|
December 31, 2014
|
|
|
4,722
|
|
|
|
36
|
|
|
|
291
|
|
|
|
503
|
|
|
|
190
|
|
|
|
487
|
|
|
|
369
|
|
|
|
18
|
|
|
|
3,638
|
|
January 1, 2015
|
|
|
4,722
|
|
|
|
36
|
|
|
|
291
|
|
|
|
503
|
|
|
|
190
|
|
|
|
487
|
|
|
|
369
|
|
|
|
18
|
|
|
|
3,638
|
|
Translation difference
|
|
|
20
|
|
|
|
2
|
|
|
|
2
|
|
|
|
16
|
|
|
|
33
|
|
|
|
6
|
|
|
|
0
|
|
|
|
1
|
|
|
|
8
|
|
Divested operation
|
|
|
145
|
|
|
|
11
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
156
|
|
Recognition in income statement
|
|
|
398
|
|
|
|
30
|
|
|
|
126
|
|
|
|
192
|
|
|
|
20
|
|
|
|
4
|
|
|
|
36
|
|
|
|
8
|
|
|
|
691
|
|
Tax recognized in other - comprehensive income
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
86
|
|
|
|
0
|
|
|
|
11
|
|
|
|
0
|
|
|
|
0
|
|
|
|
97
|
|
December 31, 2015
|
|
|
4,159
|
|
|
|
57
|
|
|
|
415
|
|
|
|
626
|
|
|
|
137
|
|
|
|
466
|
|
|
|
333
|
|
|
|
9
|
|
|
|
2,896
|
|
Note 18 Available-for-sale financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Carrying amount at start of the year
|
|
|
45
|
|
|
|
5
|
|
|
|
5
|
|
Acquired operation
|
|
|
|
|
|
|
31
|
|
|
|
|
|
Reclassification at acquisition of asset
|
|
|
|
|
|
|
1
|
|
|
|
|
|
Purchase
|
|
|
0
|
|
|
|
2
|
|
|
|
|
|
Disposal
|
|
|
12
|
|
|
|
|
|
|
|
|
|
Revaluation transferred to other - comprehensive income
|
|
|
10
|
|
|
|
7
|
|
|
|
|
|
Translation difference
|
|
|
0
|
|
|
|
1
|
|
|
|
0
|
|
Carrying amount at year-end
|
|
|
23
|
|
|
|
45
|
|
|
|
5
|
|
The financial assets are not due for payment or in need of impairment. Available-for-sale financial assets include the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
FundsUS
|
|
|
16
|
|
|
|
26
|
|
|
|
|
|
Listed interest bearing securitiesAustria
|
|
|
6
|
|
|
|
18
|
|
|
|
4
|
|
Unlisted sharesNorway
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Other
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
23
|
|
|
|
45
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale financial assets are expressed in the following currencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
USD
|
|
|
16
|
|
|
|
26
|
|
|
|
|
|
EUR
|
|
|
7
|
|
|
|
19
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
23
|
|
|
|
45
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-41
Note 19 Business combinations and divestments
Acquisition of Rottapharm
On July 31, 2014, Meda
announced that an agreement has been entered into to acquire the Italian specialty pharma company Rottapharm S.p.A. The acquisition was completed on October 10, 2014. The acquisition of Rottapharm boosts Medas earnings profile by
contributing a strong brand portfolio within consumer healthcare and increasing the companys presence on Emerging Markets by roughly 50%. The acquisition is expected to lead to annual cost synergies of approximately SEK 900 million.
The purchase price amounted to SEK 17,654 million and consisted of SEK 12,309 million in cash after deduction of net debt in
Rottapharm, 30 million Meda shares at a value, at the time of concluding the transaction, corresponding to SEK 2,976 million, and an unconditional deferred payment of EUR 275 million, which does not carry interest and matures in
January 2017, and has therefore been measured at fair value through discounting at the present value. The fair value at the time of concluding the transaction amounted to SEK 2,369 million. Transaction costs attributable to the acquisition total SEK
157 million of which SEK 36 million corresponds to transaction tax on the acquired shares. SEK 121 million of the transaction costs is recognized under medicine and business development expenses and SEK 36 million is recognized
under finance expense in the income statement.
Rottapharm contributed with net sales of SEK 1,533 million and an operating result of
SEK 409 million in the fourth quarter. The operating result is adjusted for amortizations of SEK 162 million related to adjustments of product rights to fair value and restructuring costs of SEK 485 million, which is the part of the
restructuring costs charged to Rottapharm. If Rottapharm had been consolidated from January 1, 2014, net sales for Meda would amount to SEK 18,705 million and operating result to SEK 2,207 million, excluding restructuring costs and
other items affecting comparability of SEK 710 million.
Preliminary data on acquired net assets and goodwill follows. At present Meda is
analyzing the final values of acquired net assets and uncertainties in recognized values is mainly related to deferred tax and final valuation of intangible assets. Material changes to recognized values are not expected.
There are no material changes to the value of below acquired net assets since October 10, 2014.
|
|
|
|
|
SEK million
|
|
|
|
Purchase price
|
|
|
17,654
|
|
Non-controlling interests
|
|
|
18
|
|
Fair value of net assets
|
|
|
7,878
|
|
Goodwill
|
|
|
9,758
|
|
Goodwill is mainly attributable to:
|
|
Anticipated annual cost synergies, which are expected to derive from overlapping resources within sales and marketing, administration, and research and development.
|
|
|
Extended operations on Emerging Markets with increased opportunity to establish Medas products on new geographical markets
|
|
|
Economies of scale and efficiencies within purchase, manufacturing and distribution.
|
F-42
None of the recognized goodwill is expected to be tax deductible.
|
|
|
|
|
SEK million
|
|
Fair value
|
|
Product rights
|
|
|
11,036
|
|
Deferred tax assets
|
|
|
374
|
|
Other non-current assets
|
|
|
904
|
|
Inventories
|
|
|
969
|
|
Other receivables
|
|
|
1,729
|
|
Cash and cash equivalents
|
|
|
3,416
|
|
Borrowings
|
|
|
5,491
|
|
Deferred tax liabilities
|
|
|
3,293
|
|
Pension obligations
|
|
|
858
|
|
Other non-current liabilities
|
|
|
147
|
|
Other current liabilities
|
|
|
761
|
|
Acquired net assets
|
|
|
7,878
|
|
Goodwill
|
|
|
9,758
|
|
Purchase value
|
|
|
17,636
|
|
Purchase price, cash
|
|
|
12,309
|
|
Of which outstanding purchase consideration, paid January 2, 2015
|
|
|
149
|
|
Cash and cash equivalents in acquired entities
|
|
|
3,416
|
|
Change in Group cash and cash equivalents at acquisition
|
|
|
8,744
|
|
Fair value of the 30 million Meda shares issued as part of the consideration paid was based on the published average
share price for the period 910 of October 2014. The fair value of other receivables is SEK 1,729 million and includes trade receivables with a fair value of SEK 1,281 million. The recognized trade receivables are expected to be recovered
in full.
Divestments
Euromed: In December 2015,
Meda divested the Euromed manufacturing unit in Spain. The selling price was SEK 762 million. The divestment resulted in a gain of SEK 22 million which has been recognized as other income.
Joint venture Hungary: In January 2015, Meda divested the joint venture in Hungary which was included in the Rottapharm acquisition in 2014. The divestment
resulted in a loss of SEK 4 million which has been recognized as medicine and development expenses.
Joint venture Valeant: In April 2014, Meda
reached an agreement with Valeant to terminate the joint ventures in Canada, Mexico and Australia. The divestment resulted in a gain of SEK 42 million which has been recognized as other income.
The divested net assets and the impact on the Groups cash flow are presented in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Divested net assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible assets
|
|
|
139
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
472
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
252
|
|
|
|
8
|
|
|
|
|
|
Other assets
|
|
|
138
|
|
|
|
43
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
156
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
114
|
|
|
|
111
|
|
|
|
|
|
Divested net assets
|
|
|
731
|
|
|
|
60
|
|
|
|
|
|
Cash received
|
|
|
762
|
|
|
|
7
|
|
|
|
|
|
Less transaction costs
|
|
|
16
|
|
|
|
|
|
|
|
|
|
Less cash and cash equivalents in divested entities
|
|
|
51
|
|
|
|
32
|
|
|
|
|
|
Impact on the Groups cash and cash equivalents
|
|
|
695
|
|
|
|
25
|
|
|
|
|
|
F-43
Note 20 Inventories
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Raw materials
|
|
|
740
|
|
|
|
866
|
|
|
|
388
|
|
Work in progress
|
|
|
134
|
|
|
|
191
|
|
|
|
90
|
|
Finished goods and goods for resale
|
|
|
2,002
|
|
|
|
1,931
|
|
|
|
1,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,876
|
|
|
|
2,988
|
|
|
|
1,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The cost of sales item contains expenditure for inventories recognized as an expense amounting to SEK 5,812 million
(5,081; 4,336). Other income statement items contain expenditure for inventories recognized as an expense of SEK 0 million (0; 0).
Impairment of inventories in the Group totaled SEK 176 million (84; 174) during the year.
Note 21 Trade receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Trade receivables
|
|
|
4,396
|
|
|
|
4,227
|
|
|
|
2,173
|
|
Provision for bad debts
|
|
|
-101
|
|
|
|
-76
|
|
|
|
-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,295
|
|
|
|
4,151
|
|
|
|
2,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-current receivables include trade receivables of SEK 156 million (190; 0) which are due during 2017. The fair
value of trade receivables corresponds to the carrying amount.
On December 31, 2015, the Groups trade receivables, excluding
those that were past due and those impaired, were SEK 3,819 million (3,729; 1,854).
On December 31, 2015, past due but not
impaired trade receivables amounted to SEK 574 million (368; 282). Their aging analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
< 3 months
|
|
|
349
|
|
|
|
257
|
|
|
|
199
|
|
36 months
|
|
|
109
|
|
|
|
32
|
|
|
|
28
|
|
> 6 months
|
|
|
116
|
|
|
|
79
|
|
|
|
55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
574
|
|
|
|
368
|
|
|
|
282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On December 31, 2015, the Group recognized trade receivables that were impaired amounting to SEK 189 million (131;
37). The provision for bad debts totaled SEK 101 million (76; 22).
Changes in the provision for bad debts:
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
On January 1
|
|
|
76
|
|
|
|
22
|
|
|
|
19
|
|
Additional provision for bad debts
|
|
|
68
|
|
|
|
91
|
|
|
|
16
|
|
Receivables written off during the year as non-recoverable
|
|
|
29
|
|
|
|
29
|
|
|
|
12
|
|
Reversed unused amounts
|
|
|
8
|
|
|
|
5
|
|
|
|
2
|
|
Translation difference
|
|
|
6
|
|
|
|
3
|
|
|
|
1
|
|
Carrying amount at year-end
|
|
|
101
|
|
|
|
76
|
|
|
|
22
|
|
F-44
Note 22 Derivatives, financial assets and financial liabilities
Currency forward contracts
On December 31, 2015, the
Groups open forward foreign exchange -contracts had terms of up to three months. The table below shows classification by currency.
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency pairs
|
|
Exchange
rate
|
|
|
Nominal amount,
SEK million
|
|
|
Fair value,
SEK million
|
|
EUR/SEK
|
|
|
8.9578
|
|
|
|
4,031
|
|
|
|
103
|
|
RUB/SEK
|
|
|
0.124
|
|
|
|
220
|
|
|
|
21
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency pairs
|
|
Exchange
rate
|
|
|
Nominal amount,
SEK million
|
|
|
Fair value,
SEK million
|
|
EUR/SEK
|
|
|
9.1331
|
|
|
|
7,137
|
|
|
|
43
|
|
EUR/USD
|
|
|
1.07
|
|
|
|
1,516
|
|
|
|
27
|
|
USD/SEK
|
|
|
8.079
|
|
|
|
2,852
|
|
|
|
127
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of financial assets and liabilities
The following table comprises the consolidated financial assets and liabilities that are measured at fair value.
Interest rate swaps and currency forward contracts are reported as level 2 and used for the purpose of hedging. Fair value measurement for
interest rate swaps is calculated by discounting with observable market data. -Measurement of fair value for currency forward contracts is based on published forward prices.
Available-for-sale financial assets are primarily recognized at level 1 and 2. Level 1 consists of listed interest-bearing securities.
Fair value -measurement is based on quoted prices on an active market. Level 2 mainly consists of funds where fair value measurement is based on observable market data. Embedded derivatives which were linked to the bond loan repaid in late April
2015 were expensed in Q1 2015.
Group derivatives are covered by right of set-off between assets and -liabilities with the same
counterparty. Offsetting of assets and liabilities has not been applied. Derivatives recognized as assets and liabilities are
-presented
in the table below.
No transfers have been made between level 1 and level 2 during the year.
F-45
The maximum exposure to credit risk at the end of the reporting period is the fair value of the
derivatives that are recognized as assets in the -balance sheet.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
SEK million
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 1
|
|
|
Level 2
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency forward contracts
|
|
|
|
|
|
|
149
|
|
|
|
|
|
|
|
208
|
|
|
|
|
|
|
|
49
|
|
Embedded derivatives
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale financial assets
|
|
|
6
|
|
|
|
17
|
|
|
|
18
|
|
|
|
27
|
|
|
|
4
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6
|
|
|
|
166
|
|
|
|
43
|
|
|
|
235
|
|
|
|
4
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
1)
|
|
|
|
|
|
|
23
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
33
|
|
Currency forward contracts
|
|
|
|
|
|
|
201
|
|
|
|
|
|
|
|
284
|
|
|
|
|
|
|
|
113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
224
|
|
|
|
|
|
|
|
306
|
|
|
|
|
|
|
|
146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table comprises the fair value of financial assets and liabilities by
valuation category compared with their carrying amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 SEK million
|
|
Loans and -
receivables
|
|
|
Assets at fair
value through
profit and loss
|
|
|
Derivatives
used for
hedging
|
|
|
Available-for-
sale financial
assets
|
|
|
Total
|
|
|
Fair value
|
|
Available-for-sale financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
|
|
|
|
23
|
|
|
|
23
|
|
Derivatives
|
|
|
|
|
|
|
131
|
|
|
|
18
|
|
|
|
|
|
|
|
149
|
|
|
|
149
|
|
Trade receivables and other receivables
|
|
|
4,582
|
1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,582
|
|
|
|
4,582
|
|
Cash and cash equivalents
|
|
|
1,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,612
|
|
|
|
1,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,194
|
|
|
|
131
|
|
|
|
18
|
|
|
|
23
|
|
|
|
6,366
|
|
|
|
6,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 SEK million
|
|
Liabilities at fair
value through
profit and loss
|
|
|
Derivatives
used for
hedging
|
|
|
Other financial -
liabilities
|
|
|
Total
|
|
|
Fair value
|
|
Borrowings
|
|
|
|
|
|
|
|
|
|
|
24,862
|
|
|
|
24,862
|
|
|
|
24,838
|
|
Unconditional deferred payment
|
|
|
|
|
|
|
|
|
|
|
2,458
|
|
|
|
2,458
|
|
|
|
2,458
|
|
Trade payables
|
|
|
|
|
|
|
|
|
|
|
1,696
|
|
|
|
1,696
|
|
|
|
1,696
|
|
Derivatives
|
|
|
169
|
|
|
|
55
|
|
|
|
|
|
|
|
224
|
|
|
|
224
|
|
Other liabilities
|
|
|
|
|
|
|
|
|
|
|
987
|
2)
|
|
|
987
|
|
|
|
987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
169
|
|
|
|
55
|
|
|
|
30,003
|
|
|
|
30,227
|
|
|
|
30,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 SEK million
|
|
Loans and -
receivables
|
|
|
Assets at fair
value through
profit and loss
|
|
|
Derivatives
used for
hedging
|
|
|
Available-for-
sale financial
assets
|
|
|
Total
|
|
|
Fair value
|
|
Available-for-sale financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45
|
|
|
|
45
|
|
|
|
45
|
|
Derivatives
|
|
|
|
|
|
|
211
|
|
|
|
22
|
|
|
|
|
|
|
|
233
|
|
|
|
233
|
|
Trade receivables and other receivables
|
|
|
4,665
|
1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,665
|
|
|
|
4,665
|
|
Cash and cash equivalents
|
|
|
2,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,311
|
|
|
|
2,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,976
|
|
|
|
211
|
|
|
|
22
|
|
|
|
45
|
|
|
|
7,254
|
|
|
|
7,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 SEK million
|
|
Liabilities at fair
value through
profit and loss
|
|
|
Derivatives
used for
hedging
|
|
|
Other financial -
liabilities
|
|
|
Total
|
|
|
Fair value
|
|
Borrowings
|
|
|
|
|
|
|
|
|
|
|
28,208
|
|
|
|
28,208
|
|
|
|
28,254
|
|
Unconditional deferred payment
|
|
|
|
|
|
|
|
|
|
|
2,447
|
|
|
|
2,447
|
|
|
|
2,447
|
|
Trade payables
|
|
|
|
|
|
|
|
|
|
|
1,542
|
|
|
|
1,542
|
|
|
|
1,542
|
|
Derivatives
|
|
|
226
|
|
|
|
80
|
|
|
|
|
|
|
|
306
|
|
|
|
306
|
|
Other liabilities
|
|
|
|
|
|
|
|
|
|
|
1,238
|
2)
|
|
|
1,238
|
|
|
|
1,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
226
|
|
|
|
80
|
|
|
|
32,984
|
|
|
|
33,741
|
|
|
|
33,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Consists of the Groups trade receivables, parts of other non-current receivables and parts of other short-term receivables.
|
2)
|
Consists of the parts of the Groups other short-term liabilities and accrued expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 SEK million
|
|
Loans and -
receivables
|
|
|
Assets at fair
value through
profit and loss
|
|
|
Derivatives
used for
hedging
|
|
|
Available-for-
sale financial
assets
|
|
|
Total
|
|
|
Fair value
|
|
Available-for-sale financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
Derivatives
|
|
|
|
|
|
|
46
|
|
|
|
3
|
|
|
|
|
|
|
|
49
|
|
|
|
49
|
|
Trade receivables and other receivables
|
|
|
2,224
|
1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,224
|
|
|
|
2,224
|
|
Cash and cash equivalents
|
|
|
178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
178
|
|
|
|
178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,402
|
|
|
|
46
|
|
|
|
3
|
|
|
|
5
|
|
|
|
2,456
|
|
|
|
2,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 SEK million
|
|
Liabilities at fair
value through
profit and loss
|
|
|
Derivatives
used for
hedging
|
|
|
Other financial -
liabilities
|
|
|
Total
|
|
|
Fair value
|
|
Borrowings
|
|
|
|
|
|
|
|
|
|
|
14,096
|
|
|
|
14,096
|
|
|
|
14,138
|
|
Trade payables
|
|
|
|
|
|
|
|
|
|
|
1,542
|
|
|
|
1,542
|
|
|
|
1,542
|
|
Derivatives
|
|
|
83
|
|
|
|
63
|
|
|
|
|
|
|
|
146
|
|
|
|
146
|
|
Other liabilities
|
|
|
|
|
|
|
|
|
|
|
819
|
2)
|
|
|
819
|
|
|
|
819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
83
|
|
|
|
63
|
|
|
|
16,457
|
|
|
|
16,603
|
|
|
|
16,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Consists of the Groups trade receivables, parts of other non-current receivables and parts of other short-term receivables.
|
2)
|
Consists of parts of the Groups other short-term liabilities and accrued expenses.
|
Medas
financial instruments attribute to level 1 and 2 and fair value by level is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
SEK million
|
|
Level 1
|
|
|
Level 2
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Total
|
|
Financial assets
|
|
|
6
|
|
|
|
6,360
|
|
|
|
6,366
|
|
|
|
43
|
|
|
|
7,211
|
|
|
|
7,254
|
|
|
|
4
|
|
|
|
2,452
|
|
|
|
2,456
|
|
Financial liabilities
|
|
|
|
|
|
|
30,203
|
|
|
|
30,203
|
|
|
|
3,973
|
1)
|
|
|
29,814
|
|
|
|
33,787
|
|
|
|
|
|
|
|
15,986
|
|
|
|
15,986
|
|
Note 23 Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Cash and bank balances
|
|
|
1,612
|
|
|
|
2,311
|
|
|
|
178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,612
|
|
|
|
2,311
|
|
|
|
178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-47
Note 24 Equity
Share capital and other contributed capital
No. of
shares, share capital and premiums increased since 2013 as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
(except for no. of shares)
|
|
No. of shares
|
|
|
Share capital
|
|
|
Other
contributed
capital
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2013
|
|
|
302,243,065
|
|
|
|
302
|
|
|
|
8,865
|
|
December 31, 2013
|
|
|
302,243,065
|
|
|
|
302
|
|
|
|
8,865
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2014
|
|
|
302,243,065
|
|
|
|
302
|
|
|
|
8,865
|
|
Non-cash issue, net after tax
|
|
|
30,000,000
|
|
|
|
30
|
|
|
|
2,942
|
|
New share issue, net after tax
|
|
|
33,224,306
|
|
|
|
33
|
|
|
|
1,981
|
|
December 31, 2014
|
|
|
365,467,371
|
|
|
|
365
|
|
|
|
13,788
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2015
|
|
|
365,467,371
|
|
|
|
365
|
|
|
|
13,788
|
|
December 31, 2015
|
|
|
365,467,371
|
|
|
|
365
|
|
|
|
13,788
|
|
F-48
Dividend per share
At the AGM on April 14, 2016, a dividend of SEK 2.50 per share for a total of SEK 914 million will be proposed for 2015. Dividends for 2014
amounted to SEK 914 million (SEK 2.50 per share) and for 2013 SEK 756 million (SEK 2.41 per share, after adjustment with a factor of 1,0378 due to the bonus issue element in the rights issue in relation to the Rottapharm
acquisition).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reserves, SEK million
|
|
Translation
-difference
|
|
|
Hedging
of net
investment
|
|
|
Cash flow
hedging
|
|
|
Defined benefit
pension plans
and similar plans
|
|
|
Availableforsale
financial assets
|
|
|
Total
|
|
January 1, 2013
1)
|
|
|
1,318
|
|
|
|
763
|
|
|
|
43
|
|
|
|
178
|
|
|
|
|
|
|
|
776
|
|
Translation difference
|
|
|
508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
508
|
|
Earnings from hedging net investment
|
|
|
|
|
|
|
355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
355
|
|
Tax on earnings from hedging net investment
|
|
|
|
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78
|
|
Earnings from revaluation of derivatives -recognized in equity
|
|
|
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
Tax on earnings from revaluation of derivatives recognized in equity
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
Earnings from defined benefit pension plans and similar plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
179
|
|
|
|
|
|
|
|
179
|
|
Tax on earnings from defined benefit pension plans and similar plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66
|
|
|
|
|
|
|
|
66
|
|
December 31, 2013
|
|
|
810
|
|
|
|
486
|
|
|
|
26
|
|
|
|
65
|
|
|
|
|
|
|
|
415
|
|
January 1, 2014
|
|
|
810
|
|
|
|
486
|
|
|
|
26
|
|
|
|
65
|
|
|
|
|
|
|
|
415
|
|
Translation difference
|
|
|
2,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,118
|
|
Translation difference transferred to the income statement
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
Earnings from hedging net investment
|
|
|
|
|
|
|
1,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,300
|
|
Tax on earnings from hedging net investment
|
|
|
|
|
|
|
286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
286
|
|
Earnings from revaluation of derivatives -recognized in equity
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
Tax on earnings from revaluation of derivatives recognized in equity
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Earnings from defined benefit pension plans and similar plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
441
|
|
|
|
|
|
|
|
441
|
|
Tax on earnings from defined benefit pension plans and similar plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
149
|
|
|
|
|
|
|
|
149
|
|
Earnings from available-for-sale financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
7
|
|
Tax on earnings from available-for-sale financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
December 31, 2014
|
|
|
1,297
|
|
|
|
528
|
|
|
|
17
|
|
|
|
357
|
|
|
|
6
|
|
|
|
401
|
|
January 1, 2015
|
|
|
1,297
|
|
|
|
528
|
|
|
|
17
|
|
|
|
357
|
|
|
|
6
|
|
|
|
401
|
|
Translation difference
|
|
|
376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
376
|
|
Translation difference transferred to the income statement
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
Earnings from hedging net investment
|
|
|
|
|
|
|
395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
395
|
|
Tax on earnings from hedging net investment
|
|
|
|
|
|
|
87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87
|
|
Earnings from revaluation of derivatives -recognized in equity
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Tax on earnings from revaluation of derivatives recognized in equity
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Earnings from defined benefit pension plans and similar plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66
|
|
|
|
|
|
|
|
66
|
|
Tax on earnings from defined benefit pension plans and similar plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
11
|
|
Earnings from available-for-sale financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
10
|
|
Tax on earnings from available-for-sale financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
December 31, 2015
|
|
|
918
|
|
|
|
220
|
|
|
|
18
|
|
|
|
302
|
|
|
|
3
|
|
|
|
375
|
|
1)
|
Recalculated on the basis of revised IAS 19.
|
F-49
Note 25 Borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Long-term borrowing
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank loans
|
|
|
21,150
|
|
|
|
21,190
|
|
|
|
6,295
|
|
Bond loans
|
|
|
1,350
|
|
|
|
5,611
|
|
|
|
1,497
|
|
Finance leases (see Note 15)
|
|
|
0
|
|
|
|
16
|
|
|
|
0
|
|
Other
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
22,507
|
|
|
|
26,817
|
|
|
|
7,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowing
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank loans
|
|
|
623
|
|
|
|
574
|
|
|
|
1,444
|
|
Bond loans
|
|
|
400
|
|
|
|
500
|
|
|
|
4,266
|
|
Commercial papers
|
|
|
1,331
|
|
|
|
182
|
|
|
|
593
|
|
Finance leases (see Note 15)
|
|
|
0
|
|
|
|
5
|
|
|
|
2
|
|
Factoring
|
|
|
1
|
|
|
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,355
|
|
|
|
1,391
|
|
|
|
6,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total borrowings
|
|
|
24,862
|
|
|
|
28,208
|
|
|
|
14,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Level1
|
|
|
|
|
|
|
3,973
|
|
|
|
|
|
Level 2
|
|
|
24,838
|
|
|
|
24,281
|
|
|
|
14,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
24,838
|
|
|
|
28,254
|
|
|
|
14,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value deviates from the carrying amount on the Groups bond loans which are recognized in level 2 for 2015. Fair
value measurement is based on observable market data on the OTC market. For 2014, level 1 consists of the bond loan of EUR 400 million which was absorbed in conjunction with the acquisition of Rottapharm and redeemed in late April 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturities for long-term borrowing:
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Payable within 12 years
|
|
|
2,580
|
|
|
|
973
|
|
|
|
3,807
|
|
Payable within 25 years
|
|
|
19,927
|
|
|
|
21,985
|
|
|
|
3,985
|
|
Payable after 5 years
|
|
|
|
|
|
|
3,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
22,507
|
|
|
|
26,817
|
|
|
|
7,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts in SEK million, by currency, for the Groups
-borrowing:
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
EUR
|
|
|
14,834
|
|
|
|
18,237
|
|
|
|
|
|
USD
|
|
|
5,149
|
|
|
|
5,005
|
|
|
|
7,287
|
|
SEK
|
|
|
4,879
|
|
|
|
4,966
|
|
|
|
6,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
24,862
|
|
|
|
28,208
|
|
|
|
14,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unused credits:
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Unused unconfirmed credits
|
|
|
700
|
|
|
|
700
|
|
|
|
700
|
|
Unused confirmed credits
|
|
|
5,227
|
|
|
|
5,505
|
|
|
|
8,001
|
|
F-50
Note 26 Post-employment benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Present value of funded obligations
|
|
|
1,262
|
|
|
|
1,248
|
|
|
|
942
|
|
Fair value of plan assets
|
|
|
869
|
|
|
|
854
|
|
|
|
688
|
|
Deficit of the funded plans
|
|
|
393
|
|
|
|
393
|
|
|
|
254
|
|
Present value of unfunded obligations
|
|
|
1,862
|
|
|
|
2,021
|
|
|
|
846
|
|
Net
|
|
|
2,255
|
|
|
|
2,415
|
|
|
|
1,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Recognized as assets
1)
|
|
|
18
|
|
|
|
15
|
|
|
|
7
|
|
Recognized as liabilities
|
|
|
2,273
|
|
|
|
2,430
|
|
|
|
1,107
|
|
Net
|
|
|
2,255
|
|
|
|
2,415
|
|
|
|
1,100
|
|
1)
|
Plans with a net surplus, i.e. plans where assets exceed the defined benefit obligations, are recognized as other noncurrent receivables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in fair value of plan assets during the year
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
At years start
|
|
|
854
|
|
|
|
688
|
|
|
|
679
|
|
Interest income
|
|
|
34
|
|
|
|
32
|
|
|
|
25
|
|
Remeasurements
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on plan assets, excluding amounts included in interest income
|
|
|
35
|
|
|
|
36
|
|
|
|
27
|
|
Contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
Employers
|
|
|
48
|
|
|
|
58
|
|
|
|
45
|
|
Payments from plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit payments
|
|
|
57
|
|
|
|
44
|
|
|
|
43
|
|
Settlements
|
|
|
36
|
|
|
|
38
|
|
|
|
40
|
|
Exchange differences
|
|
|
61
|
|
|
|
122
|
|
|
|
5
|
|
At year-end
|
|
|
869
|
|
|
|
854
|
|
|
|
688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in present value of the obligations during the year
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
At years start
|
|
|
3,269
|
|
|
|
1,788
|
|
|
|
1,963
|
|
Costs for service in current year
|
|
|
30
|
|
|
|
17
|
|
|
|
19
|
|
Costs for service in prior years
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Interest expense
|
|
|
87
|
|
|
|
79
|
|
|
|
65
|
|
Remeasurements
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (-)/loss from change in demographic assumptions
|
|
|
16
|
|
|
|
37
|
|
|
|
2
|
|
Gain (-)/loss from change in financial assumptions
|
|
|
98
|
|
|
|
382
|
|
|
|
159
|
|
Experience gains (-)/losses
|
|
|
16
|
|
|
|
5
|
|
|
|
7
|
|
Payments from plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit payments
|
|
|
133
|
|
|
|
102
|
|
|
|
77
|
|
Settlements
|
|
|
36
|
|
|
|
38
|
|
|
|
40
|
|
Acquired operation
|
|
|
|
|
|
|
858
|
|
|
|
|
|
Exchange differences
|
|
|
37
|
|
|
|
253
|
|
|
|
7
|
|
At year-end
|
|
|
3,124
|
|
|
|
3,269
|
|
|
|
1,788
|
|
The defined benefit obligation and plan assets are composed by country as follows in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 SEK million
|
|
Germany
|
|
|
US
|
|
|
Sweden
|
|
|
UK
|
|
|
Other
|
|
|
Total
|
|
Present value of obligation
|
|
|
1,652
|
|
|
|
1,011
|
|
|
|
102
|
|
|
|
193
|
|
|
|
166
|
|
|
|
3,124
|
|
Fair value of plan assets
|
|
|
|
|
|
|
613
|
|
|
|
|
|
|
|
209
|
|
|
|
47
|
|
|
|
869
|
|
Net
|
|
|
1,652
|
|
|
|
398
|
|
|
|
102
|
|
|
|
16
|
|
|
|
119
|
|
|
|
2,255
|
|
F-51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 SEK million
|
|
Germany
|
|
|
US
|
|
|
Sweden
|
|
|
UK
|
|
|
Other
|
|
|
Total
|
|
Present value of obligation
|
|
|
1,789
|
|
|
|
997
|
|
|
|
104
|
|
|
|
189
|
|
|
|
190
|
|
|
|
3,269
|
|
Fair value of plan assets
|
|
|
|
|
|
|
606
|
|
|
|
|
|
|
|
203
|
|
|
|
45
|
|
|
|
854
|
|
Net
|
|
|
1,789
|
|
|
|
391
|
|
|
|
104
|
|
|
|
14
|
|
|
|
145
|
|
|
|
2,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 SEK million
|
|
Germany
|
|
|
US
|
|
|
Sweden
|
|
|
UK
|
|
|
Other
|
|
|
Total
|
|
Present value of obligation
|
|
|
686
|
|
|
|
747
|
|
|
|
81
|
|
|
|
143
|
|
|
|
131
|
|
|
|
1,788
|
|
Fair value of plan assets
|
|
|
|
|
|
|
495
|
|
|
|
|
|
|
|
149
|
|
|
|
44
|
|
|
|
688
|
|
Net
|
|
|
686
|
|
|
|
252
|
|
|
|
81
|
|
|
|
6
|
|
|
|
87
|
|
|
|
1,100
|
|
Germany
In Germany, Meda
has unfunded defined benefit pension plans. These plans are closed to new members, and new employees are offered a defined contribution solution instead. The defined benefit pension plans are based on the final salary and give employees covered by
the plan benefits in the form of a percentage of salary upon retirement. The level of benefits also depends on the employees period of service. Withdrawals for pensions are made for payouts to the retirees with vested pension. The pension
payouts for the German plans are adjusted based on the consumer price index. The plans cover 2,477 people, whereof 549 were active employees on December 31, 2015.
One of the pension plans in Germany, which was partially financed by the employer and partially by the employees, was discontinued on
December 31, 2004 and is secured by Bayer Pensionskasse. Meda is according to German law (Gesetz zur Verbesserung der betrieblichen Altersversorgung) liable to cover any future pension increase. The plan is a defined benefit plan that
encompasses several employers. Meda recognizes this plan as a defined contribution plan since the Group has not had access to information that would enable this plan to be recognized as a defined benefit plan. Meda will not pay any premiums to Bayer
Pensionskasse for 2016. Medas share of the total number of active participants in the plan as of December 31, 2015 was 0.2% (0.3; 0.4).
US
The defined benefit pension plan in the US is a tax-qualified plan that is subject to the Employee Retirement Income Security Act of 1974 (ERISA)
minimum funding standards. The plan includes 1,821 persons whereof 104 are active employees as of December 31, 2015.
The members
defined benefit are based on their compensation and service with the Company. The plan is closed since January 31, 2003 and there are no benefit accruals after that date. Thus, service and compensation with the Company earned after
January 31, 2003 are not taken into account for benefit accrual purposes, but such service is taken into account for purposes of determining eligibility for early retirement benefits. A cost of living adjustment is done on the benefit payments
for certain members of the plan who were hired before April 1, 1977. No cost of living adjustment is required on the portion of the benefit earned after September 30, 1980.
The defined benefit pension plan in the US reports a deficit of SEK 398 million (391; 252) as of December 2015. Meda is obliged to fund
the plan according to the rules of the Pension Protection Act of 2006 in the US and subsequent amendments under HATFA and the Bipartisan Budget Act of 2015, which generally require contributions to the plan on a yearly basis so that the deficit is
funded within 7 years. Any gains or losses to the plan assets will also affect the level of future contributions. Contributions in 2016 are estimated to SEK 58 million. The contribution is calculated on a yearly basis by an external actuary.
The trust fund of the defined benefit pension plan in the US is actively monitored by an investment committee and by SEI Investments
(SEI). The board of Meda Pharmaceuticals Inc. has appointed an investment committee which consists of employees of the company. The committee works with SEI to determine investing decisions and allocation of funds. This work is abided by an
investment policy, which is determined by the board
F-52
of Meda Pharmaceuticals Inc., and the SEI investment management agreement. The investments are determined within an asset-liability matching framework to achieve a long-term investment that is in
line with the obligations under the pension plan. The companys overall objective is to improve the funded status of the plan. The investment committee together with SEI actively monitors how the duration and the expected yield of the
investments are matching the expected cash outflows arising from the pension obligation. The company has not changed the processes used to manage its risks from previous years. As the investments are well diversified, a decline in any single
investment would not have a significant impact on the total value of the assets.
Sweden
Meda has both defined benefit and defined contribution plans based on collective agreement between the parties in the Swedish labor market.
The defined benefit plan, known as ITP 2, for employees born in 1978 or earlier. The retirement pension in the ITP 2 plan is a defined benefit obligation
handled by Meda and administered and secured by PRI Pensionsgaranti which also provides credit insurance. Obligations for family pension and disability pension for salaried employees is secured through insurance with Alecta. As per UFR 3 (statement
issued by the Swedish Financial Reporting Board) this is a multi-employer benefit-based plan. For the 2015 financial year, the Group did not have access to information that would enable this plan to be recognized as a defined benefit plan. These
benefits as per ITP 2, secured through Alecta insurance, are therefore recognized as a defined contribution plan. Premiums for the defined benefit survivors pension plan is calculated on an individual basis and based, among other things, on
salary, previously vested pension and the assumed remaining service period. The expected premiums for 2016 for ITP 2 plans with Alecta amount to SEK 7 million (6; 2). Medas share of the total contributions to the plan amounts to 0.003%
(0.003; 0.002) and Medas share of the total number of active participants is 0.018% (0.017; 0.013). At the end of 2015, Alectas surplus (in the form of the collective consolidation level) was 153% (143; 148). The defined benefit ITP plan
is a pension plan based on final salary and gives employees covered by the plan benefits in the form of a percentage of salary upon retirement. The level of the benefit also depends on the employees period of service. The plans are unfunded
and withdrawals for pensions are made for the payouts to the retirees with vested pension. The pension payouts from the plan are not adjusted based on the consumer price index. The plan covers 332 people, 87 of whom were active employees as of
December 31, 2015.
The defined contribution plan, known as ITP 1, for employees born in 1979 or later. The defined contribution plan ITP 1 or
alternative ITP, for employees earning more than 10 income base amount and who have opted out of the defined benefit plan ITP 2, where rules are set by the Company and approved by each employee selected to participate.
UK
The defined benefit pension plan in the UK is a
funded plan and has been closed to new members since January 1, 2007, and there are no benefit accruals after that date. New employees are currently offered a retirement solution through a defined contribution plan. The defined benefit pension
plan includes 163 persons whereof none are active employees as of December 31, 2015.
The plan is a final salary pension plan, which
provides benefits to members in the form of a guaranteed level of pension payable for life. The level of benefits provided also depends on members length of service. The pension payment in UK is on a yearly basis adjusted with 3% for some of
the plan members. For other members of the plan the pension payments are adjusted for inflation.
The defined benefit pension plan in UK
reports a surplus of SEK 16 million as of December 2015. Meda makes yearly contributions to the plan to ensure that the plan does not report a deficit. Any changes on the value of the plan assets may affect the yearly contribution to the plan.
Contributions in 2016 are estimated to SEK 6 million. The contribution is monitored and calculated by an external actuary on a regular basis.
F-53
The funded pension plan in UK is administrated by Legal & General Investment Management
Limited (LGIM). The administration is regulated by an investment management agreement. The agreement includes targets related to return on plan assets of which an investment strategy is suggested for Meda Pharmaceuticals Ltd. Investment decisions
are handled by trustees, ENTs (Entity Nominated Trustees), which according to British law is designated by Meda Pharmaceuticals Ltd. The investments are determined within an asset-liability matching strategy to achieve a long-term investment that is
in line with the obligations under the pension plan. The companys objective is to match assets to the pension obligations by investing in long term fixed interest securities with maturities that match the benefit payment as they fall due. The
trustees and LGIM actively monitor how the duration and the expected yield of the investments are matching the expected cash outflows arising from the pension obligation. The company has not changed the processes used to manage its risks from
previous years. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.
Other
Recognized liabilities for other pension plans as
of December 31, 2015 amounted to SEK 120 million (145; 88). Other pension obligations are mainly related to France, Austria and Italy.
The
significant actuarial assumptions are presented in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
(weighted average, %)
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Discount rate
|
|
|
2.6
|
|
|
|
2.3
|
|
|
|
3.6
|
|
Future salary increase
|
|
|
2.2
|
|
|
|
2.2
|
|
|
|
2.2
|
|
Future pension increase
|
|
|
1.6
|
|
|
|
1.6
|
|
|
|
1.3
|
|
Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and
experience in each territory. These assumptions translate into an average life expectancy in years for a person retiring at age 65.
|
|
|
|
|
|
|
|
|
|
|
|
|
(weighted average, %)
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Retiring at the end of the reporting period (age 65 years)
|
|
|
|
|
|
|
|
|
|
|
|
|
Male
|
|
|
19.5
|
|
|
|
20.1
|
|
|
|
20.2
|
|
Female
|
|
|
23.0
|
|
|
|
23.4
|
|
|
|
23.3
|
|
|
|
|
|
Retiring 25 years after the end of the reporting period (age 40 years)
|
|
|
|
|
|
|
|
|
|
|
|
|
Male
|
|
|
19.5
|
|
|
|
19.7
|
|
|
|
19.4
|
|
Female
|
|
|
23.5
|
|
|
|
23.5
|
|
|
|
22.7
|
|
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions are:
1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
Discount rate
|
|
|
Future salary increase
|
|
|
Future pension increase
|
|
|
Life expectancy
|
|
|
|
+0.5%
|
|
|
0.5%
|
|
|
+0.5%
|
|
|
0.5%
|
|
|
+0.5%
|
|
|
0.5%
|
|
|
+1 year
|
|
|
1 year
|
|
Present value of funded - obligations
|
|
|
1,262
|
|
|
|
1,205
|
|
|
|
1,323
|
|
|
|
1,264
|
|
|
|
1,261
|
|
|
|
1,273
|
|
|
|
1,254
|
|
|
|
1,283
|
|
|
|
1,242
|
|
Fair value of assets
|
|
|
869
|
|
|
|
869
|
|
|
|
869
|
|
|
|
869
|
|
|
|
869
|
|
|
|
869
|
|
|
|
869
|
|
|
|
869
|
|
|
|
869
|
|
Present value of unfunded - obligations
|
|
|
1,862
|
|
|
|
1,734
|
|
|
|
2,007
|
|
|
|
1,877
|
|
|
|
1,847
|
|
|
|
1,981
|
|
|
|
1,753
|
|
|
|
1,947
|
|
|
|
1,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
2,255
|
|
|
|
2,070
|
|
|
|
2,461
|
|
|
|
2,272
|
|
|
|
2,239
|
|
|
|
2,385
|
|
|
|
2,138
|
|
|
|
2,361
|
|
|
|
2,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and
changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit method) has been applied as when calculating the pension
liability.
|
F-54
Plan assets in the Group, which are mainly attributable to US and UK, are comprised as presented in the table
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted
|
|
|
2015
Unquoted
|
|
|
Total
|
|
|
%
|
|
|
Quoted
|
|
|
2014
Unquoted
|
|
|
Total
|
|
|
%
|
|
|
Quoted
|
|
|
2013
Unquoted
|
|
|
Total
|
|
|
%
|
|
Equity instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
|
|
292
|
|
|
|
51
|
|
|
|
343
|
|
|
|
40
|
|
|
|
305
|
|
|
|
|
|
|
|
305
|
|
|
|
36
|
|
|
|
219
|
|
|
|
|
|
|
|
219
|
|
|
|
32
|
|
UK
|
|
|
43
|
|
|
|
|
|
|
|
43
|
|
|
|
5
|
|
|
|
42
|
|
|
|
|
|
|
|
42
|
|
|
|
5
|
|
|
|
30
|
|
|
|
|
|
|
|
30
|
|
|
|
4
|
|
Debt instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
|
|
171
|
|
|
|
17
|
|
|
|
188
|
|
|
|
22
|
|
|
|
180
|
|
|
|
|
|
|
|
180
|
|
|
|
21
|
|
|
|
133
|
|
|
|
|
|
|
|
133
|
|
|
|
19
|
|
UK
|
|
|
166
|
|
|
|
|
|
|
|
166
|
|
|
|
19
|
|
|
|
161
|
|
|
|
|
|
|
|
161
|
|
|
|
19
|
|
|
|
119
|
|
|
|
|
|
|
|
119
|
|
|
|
17
|
|
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
|
|
|
|
|
|
82
|
|
|
|
82
|
|
|
|
9
|
|
|
|
|
|
|
|
66
|
|
|
|
66
|
|
|
|
8
|
|
|
|
|
|
|
|
27
|
|
|
|
27
|
|
|
|
4
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
48
|
|
|
|
55
|
|
|
|
6
|
|
|
|
23
|
|
|
|
93
|
|
|
|
116
|
|
|
|
17
|
|
Other countries
|
|
|
24
|
|
|
|
23
|
|
|
|
47
|
|
|
|
5
|
|
|
|
23
|
|
|
|
22
|
|
|
|
45
|
|
|
|
5
|
|
|
|
44
|
|
|
|
0
|
|
|
|
44
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
696
|
|
|
|
173
|
|
|
|
869
|
|
|
|
100
|
|
|
|
718
|
|
|
|
136
|
|
|
|
854
|
|
|
|
100
|
|
|
|
567
|
|
|
|
121
|
|
|
|
688
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions to the Groups defined benefit pension and healthcare plans for the 2016 financial year are expected to
amount to SEK 145 million. The weighted average maturity for the pension obligations is 13 years.
The maturities for expected
undiscounted payouts for post-employment pension are listed below.
|
|
|
|
|
Maturity
|
|
Undiscounted payouts, SEK million
|
|
Within 1 year
|
|
|
145
|
|
Between 12 years
|
|
|
158
|
|
Between 25 years
|
|
|
512
|
|
More than 5 years
|
|
|
3,912
|
|
|
|
|
|
|
Total
|
|
|
4,727
|
|
|
|
|
|
|
Risks
Through its
defined post-employment defined benefit pension and healthcare plans, the Group is exposed to a number of risks. The most significant risks are described below.
|
|
|
Type of risk
|
|
|
Volatility in assets
|
|
The largest portion of the Groups plan assets are in the US and the UK. The plan liabilities are calculated using a discount rate
based on corporate bonds. If the plan assets do not achieve returns corresponding to the level of the discount rate, a deficit will arise.
The US and UK plans contain equities. Although, over the long-term, the return is expected to exceed the interest on corporate bonds, the equities are
associated with volatility and risk in the short-term. As the plans approach maturity, Meda intends to reduce the level of investment risk by increasing investments in assets that better match the liability.
|
|
|
Bond yield changes
|
|
A significant part of the Groups plans is unfunded and located in Germany where the discount rate is based on corporate bonds. A reduction in the interest on corporate bonds results in an increase in plan liabilities. In
the US, the pension plans are funded and any increase in the liability as a result of a decrease in interest on corporate bonds is to some extent compensated for by an increase in the value of the corporate bond
holding.
|
F-55
|
|
|
Type of risk
|
|
|
Inflation
|
|
In the countries where the Group has pension obligations that are linked to inflation, higher inflation in those countries would lead to higher pension liabilities. The plan assets in the US and the UK are either not affected by
(fixed interest on bonds) or slightly correlated with (equities) inflation, which means that an increase in inflation will increase the deficit in these plans.
|
|
|
Life expectancy assumptions
|
|
In most of the pension plans, individuals covered by the plans will receive life-long benefits, and accordingly, higher life expectancy assumptions result in higher pension liabilities.
|
Note 27 Other non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Unconditional deferred payment
|
|
|
2,458
|
|
|
|
2,447
|
|
|
|
|
|
Other non-current liabilities
|
|
|
16
|
|
|
|
17
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,474
|
|
|
|
2,464
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The purchase price for Rottapharm includes an unconditional deferred payment of EUR 275 million which carries no interest
and matures in January 2017. This is measured at fair value by discounting to present value using an interest rate of 2.6%. Interest cost for the period, since the acquisition, which is recognized under financial expenses amounts to SEK 65
million (14; -).
Note 28 Other provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
Returns
|
|
|
Personnel
|
|
|
Restructuring
|
|
|
Legal -
disputes
|
|
|
Other
|
|
|
Total
|
|
January 1, 2015
|
|
|
513
|
|
|
|
141
|
|
|
|
620
|
|
|
|
73
|
|
|
|
148
|
|
|
|
1,495
|
|
Additional provisions
|
|
|
488
|
|
|
|
76
|
|
|
|
273
|
|
|
|
213
|
|
|
|
30
|
|
|
|
1,080
|
|
Utilized during the year
|
|
|
300
|
|
|
|
35
|
|
|
|
561
|
|
|
|
30
|
|
|
|
37
|
|
|
|
963
|
|
Reversed unused amounts
|
|
|
141
|
|
|
|
12
|
|
|
|
72
|
|
|
|
2
|
|
|
|
73
|
|
|
|
300
|
|
Translation difference
|
|
|
37
|
|
|
|
8
|
|
|
|
6
|
|
|
|
|
|
|
|
6
|
|
|
|
33
|
|
December 31, 2015
|
|
|
597
|
|
|
|
178
|
|
|
|
254
|
|
|
|
254
|
|
|
|
62
|
|
|
|
1,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Non-current provisions
|
|
|
337
|
|
|
|
375
|
|
|
|
209
|
|
Current provisions
|
|
|
1,008
|
|
|
|
1,120
|
|
|
|
396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,345
|
|
|
|
1,495
|
|
|
|
605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected outflow date, SEK million
|
|
Non-current
provisions
|
|
In 23 years
|
|
|
118
|
|
In 45 years
|
|
|
62
|
|
After 5 years
|
|
|
157
|
|
|
|
|
|
|
Total
|
|
|
337
|
|
|
|
|
|
|
Provisions for returns
The provision for returns mainly comprises reserves for products that Meda is obliged to buy back from the customer a short time before or after their expiry
date.
F-56
Provisions for personnel
SEK 94 million (89; 70) of provisions for personnel relates to health benefits in the US after terminated employment which are unfunded. Accounting
method, assumptions and number of evaluation points are similar to those used for defined benefit pension plans. The plans are closed and no actively employed are covered by the plan. The actuarial loss for 2015 amounted to SEK 2 million and
interest expenses to SEK 4 million. Benefits paid from the plans amounted to SEK 9 million. Expected fees for 2016 amount to SEK 6 million. Weighted average maturity for the plans amount to 9 years.
The principal actuarial assumptions are the discount rate and long-term increase in the cost of healthcare which as of December 31, 2015
amounted to 4.25% (3.75; 4.5) and 4.0% (4.0; 5.0). A change in the discount rate of +/ 0.25% decrease / increase the liability with SEK +/ 2 million. A change in the long-term increase in the cost of healthcare by +/ 0.25% increase
/ decrease the obligation of SEK +/ 1 million.
Other personnel related provisions are mainly related to provisions for terminated
contracts in Germany and Italy.
Provisions for legal disputes
SEK 189 million of the provision refers to a provision for an ongoing legal dispute in the US related to the product Reglan, which is expected to be
closed during the third quarter 2016. See Note 29 for more information.
Individual assessment of ongoing disputes occurs continually.
Provisions for restructuring
The provision for
restructuring amounted to SEK 254 million (620; 14) whereof SEK 249 million is related to Rottapharm. Costs for restructuring during the year relating to the integration of Rottapharm were SEK 291 million (631; -). SEK 8 million
is recognized under cost of sales, SEK 227 million under selling expenses, SEK 25 million under medicine and business development expenses and SEK 47 million under administrative expenses in the income statement. The costs are mainly
related to personnel expenses. SEK 196 million of the restructuring provision will be paid in 2016.
Other provisions
Other provisions include, for example, excise duties, sales commissions and provisions for ongoing tax audits.
Note 29 Contingent liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Pledged collateral, SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantees
|
|
|
31
|
|
|
|
32
|
|
|
|
32
|
|
|
|
In-licensing of the global rights to Edluar may lead to milestone payments totaling USD 60 million when defined sales targets are reached.
|
|
|
The acquisition of the European rights to the substance sotiromod may lead to milestone payments of USD 10 million when defined development stages are reached.
|
|
|
The agreement with Ethypharm for the rights to the ketoprofenomeprazole combination may lead to milestone payments of EUR 5 million upon registration and when defined sales targets are reached.
|
|
|
In-licensing of OraDisc A for the European market may lead to milestone payments of EUR 4.8 million.
|
F-57
|
|
The agreement with Cipla to expand the geographic territory for Dymista and the product development partnership may lead to milestone payments of USD 35 million when defined development stages are reached and upon
the launch of new products.
|
|
|
The acquisition of ZpearPoint may lead to milestone payments of NOK 40 million when defined development stages and sales targets are reached for the product EB24.
|
|
|
The in-licensed rights to Betadine from Mundipharma will expire on December 31, 2017. With this counterparty, Meda has a binding option to acquire an eternal license for the rights to Betadine under certain
conditions. The parties have entered into negotiations on future rights to the product.
|
|
|
The maximum additional purchase consideration for other product rights is around SEK 74 million.
|
|
|
In conjunction with the acquisition of Carter-Wallace in 2001, Meda Pharmaceuticals Inc. (previously MedPointe Inc.) took over certain environment-related obligations. In 1982, US Environmental Protection Agency (EPA)
stated that Carter-Wallace, along with more than 200 other companies, were potentially responsible for waste placed at the Lone Pine Landfill waste disposal facility. In 1989 and 1991, without admitting responsibility, Carter-Wallace and 122 other
companies entered into an agreement with the EPA to decontaminate Lone Pine. The process is ongoing. The provision for decontamination costs amounted to USD 2.0 million as of December 31, 2015.
|
|
|
In conjunction with the purchase of Alaven Pharmaceuticals in 2010, Meda Pharmaceuticals Inc. assumed responsibility for ongoing US product liability cases involving the product Reglan (metoclopramide). Presently, there
are slightly less than 3,300 cases in which the company is named as one of multiple defendants, with most of the cases in Philadelphia, San Francisco and New Brunswick. In general, the cases involve plaintiffs that took Reglan for long periods of
time to control gastric stasis and gastroesophageal reflux and developed the side effect tardive dyskinesia, which is characterized by repetitive, involuntary muscle movements, generally of the face and extremities. Even though the Reglan labeling
since 1986 has warned against the side effect if the product was taken for more than 12 weeks, the plaintiffs allege that the warning was not prominent enough. While Meda believes it has meritorious defenses to these claims, in order to avoid the
expense and distraction of litigation, Meda has entered into a confidential settlement agreement which establishes a framework to resolve all of the claims. Meda has recognized a provision of USD 25 million in the third quarter 2015 whereof USD
2.5 million was paid in the fourth quarter 2015. The settlement is subject to sufficient participation by the plaintiffs as determined in Medas sole discretion.
|
|
|
From time to time, Meda is involved in legal disputes that are common in the pharmaceutical industry. Although it is not possible to issue any -guarantees about the outcome of these disputes, on the basis of Group
managements present and fundamental judgment, we do not anticipate that they will have any materially negative impact on Medas financial -position. This standpoint may change over time.
|
Note 30 Cash flow
Adjustments for items not included
in cash flow
|
|
|
|
|
|
|
|
|
|
|
|
|
SEK million
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of property, plant, and equipment
|
|
|
211
|
|
|
|
133
|
|
|
|
100
|
|
Amortization of intangible assets
|
|
|
3,073
|
|
|
|
2,370
|
|
|
|
2,086
|
|
Bank charges
1)
|
|
|
115
|
|
|
|
186
|
|
|
|
25
|
|
Other
|
|
|
26
|
|
|
|
21
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,373
|
|
|
|
2,668
|
|
|
|
2,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Bank charges taken to income during the year.
|
F-58
Note 31 Transactions with related parties
Fidim S.r.l. owns 33,016,286 shares in Meda AB, corresponding to 9.0% of the total number of shares. Fidim S.r.l. received 30,000,000 MEDA shares as part of
the purchase price for Medas acquisition of Rottapharm. Luca Rovati is a board member of Meda since November 2014 and partner in Fidim S.r.l.
|
|
|
To Meda related parties:
|
|
|
Fidim S.r.l.
|
|
Board member Luca Rovati holds shares in Fidim S.r.l.
|
|
|
RRL Immobiliare SpA
|
|
Fidim S.r.l. owns RRL Immobiliare SpA. Luca Rovati is a board member of RRL Immobiliare SpA
|
|
|
Rottapharm Biotech S.r.l.
|
|
Fidim S.r.l. owns Rottapharm Biotech S.r.l.
|
|
|
DemiMonde S.r.l.
|
|
Demi-Monde S.r.l. is owned by related party to board member Luca Rovati
|
|
|
Day Spa S.r.l.
|
|
Day Spa S.r.l. is owned by related party to board member Luca Rovati
|
|
|
Johan & Levi S.r.l.
|
|
Johan & Levi S.r.l. is owned by related party to board member Luca Rovati
|
Transactions with related parties:
|
|
|
|
|
|
|
Sales of goods and services and other sales, SEK
million
|
Rottapharm Biotech S.r.l.
|
|
|
4.1
|
|
|
Refers to sales of services
|
Other related parties
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
Purchases of goods and services, SEK million
|
RRL Immobiliare SpA
|
|
|
28.1
|
|
|
Refers to rental of office and factory space
|
Rottapharm Biotech S.r.l.
|
|
|
6.8
|
|
|
Refers to purchases of research and development services
|
|
|
|
|
|
|
|
|
|
Balances as per December 31, 2015, SEK million
|
|
|
|
Receivables
|
|
|
Liabilities
|
|
Fidim S.r.l.
|
|
|
12.1
|
1)
|
|
|
|
|
RRL Immobiliare SpA
|
|
|
5.4
|
|
|
|
9.2
|
|
Rottapharm Biotech S.r.l.
|
|
|
0.8
|
|
|
|
0.4
|
|
Other related parties
|
|
|
0.1
|
|
|
|
0.3
|
|
1)
|
Refers to tax related expenses which have been re-charged to Fidim S.r.l.
|
All transactions between related
parties are based on market conditions and negotiations have taken place on an arms length basis.
Remuneration to senior executives
is described in Note 8. No other related party transactions occurred in 2015.
F-59
APPENDIX I
OPINION OF SEB CORPORATE FINANCE, SKANDINAVISKA ENSKILDA BANKEN AB
To the Board of Directors of Meda Aktiebolag (publ)
The Board of Directors of Meda Aktiebolag (publ) (Meda) (the Board) has requested the opinion of SEB Corporate Finance, Skandinaviska
Enskilda Banken AB (SEB Corporate Finance) as to the fairness, from a financial point of view, to the shareholders of Meda of the offer consideration per Meda share (the Offer Consideration) proposed to be received by such
shareholders pursuant to a public offer (the Offer) by Mylan N.V. (Mylan), comprised of cash and Mylan shares, subject to adjustment, proration and allocation (as to which SEB Corporate Finance expresses no opinion), which
Offer is planned to be announced on February 10, 2016.
As described to SEB Corporate Finance by the management of Meda, pursuant to the terms of the
Offer, the total implied value of the Offer Consideration may not be less than SEK 152 (the Floor Value). For purposes of its analyses and this opinion, SEB Corporate Finance has assumed, with the Boards consent, that the Offer
Consideration will have a total implied value per Meda share equal to the Floor Value.
In connection with the presentation of this opinion, SEB Corporate
Finance has,
inter alia,
reviewed a draft, provided to SEB Corporate Finance on February 9, 2016, of the Offer press release (including the terms and conditions of the Offer set out therein), certain publicly available and other business
and financial information relating to Meda (including annual reports for the financial years 2013 and 2014 and the interim report for the first nine months of 2015 and certain reports prepared by equity analysts) as well as certain financial
forecasts and other information and data which were provided to or discussed with SEB Corporate Finance by the management of Meda and that Meda has directed SEB Corporate Finance to utilize for the purposes of its analyses (including extrapolations
based on certain alternative assumptions provided by the management of Meda). In addition, SEB Corporate Finance has held discussions with the Chairman of the Board of Meda and senior members of the management of Meda concerning the businesses,
operations, financial position and prospects of Meda.
SEB Corporate Finance has performed discounted cash flow analyses and Leveraged Buy-Out
analyses of Meda. Furthermore, SEB Corporate Finance has considered certain financial and stock exchange related information regarding Meda in comparison with certain other companies with similar operations and other transactions that SEB Corporate
Finance considered relevant in evaluating Meda and the Offer. SEB Corporate Finance also has reviewed the share price development and trading activity in Meda shares on Nasdaq Stockholm and has performed such other analyses and studies as SEB
Corporate Finance has deemed appropriate as a basis for this opinion.
Given that the Offer Consideration only consists of up to 20 percent of newly
issued Mylan shares, and since the share portion of the Offer Consideration is dependent on the Mylan share price immediately before the Offer Consideration will be paid, SEB Corporate Finances mandate does not include financial analyses or an
opinion relating to Mylan or the value of Mylan shares. SEB Corporate Finance has, however, reviewed certain publicly available business and financial information relating to Mylan (including certain reports prepared by equity analysts) for the
purposes of this opinion. In addition, SEB has considered certain financial and stock exchange related information regarding Mylan in comparison with certain other companies with similar operations that SEB Corporate Finance considered relevant in
evaluating Mylar. SEB Corporate Finance also has reviewed the share price development and trading activity in Mylan shares on the NASDAQ Global Select Stock Market.
|
|
|
Visiting address:
Kungsträdgårdsgatan 8,
Postal
address:
106 40 Stockholm
Switchboard:
+46 771 62 10 00
|
|
|
|
|
www.sebgroup.com
|
I-1
SEB Corporate Finance has relied, without independent
verification, upon the accuracy in all material aspects of all of the financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with SEB Corporate Finance and upon the assumption that no
information of material importance to the evaluation of Medas future earnings capacity or for SEB Corporate Finances assessment in general has been omitted.
With respect to financial forecasts and other information and data provided to or otherwise reviewed by or discussed with SEB Corporate Finance by the
management of Meda, SEB Corporate Finance has been advised by such management, and SEB Corporate Finance has assumed, that such financial forecasts and other information and data (including extrapolations thereto) were reasonably prepared on bases
reflecting the best currently available estimates and judgments of such management as to the future financial performance of Meda and the other matters covered thereby. With respect to the publicly available research analysts estimates
relating to Meda reflected in such financial forecasts and other information and data and publicly available research analysts estimates relating to Mylan, SEB Corporate Finance has assumed that they reflect reasonable estimates and judgments
as to, and are a reasonable basis upon which to evaluate, the future financial performance of Meda, Mylan and the other matters covered thereby. SEB Corporate Finance further has assumed that the financial results reflected in the financial
forecasts and other information and data utilized in its analyses will be realized at the times and in the amounts projected. SEB Corporate Finance has assumed that any adjustments, prorations or allocations of the Offer Consideration would not be
meaningful in any material respect to its analyses or this opinion.
SEB Corporate Finance has not conducted any due diligence in order to verify the
accuracy of received or reviewed information, and has not made any independent evaluation or assessment of the assets and liabilities (contingent, off-balance sheet or otherwise) of Meda, Mylan or any other entity nor has made any physical
inspection of the properties or assets of Meda, Mylan or any other entity. SEB Corporate Finance has assumed that the Offer will be consummated in accordance with its terms and in compliance with all applicable laws, documents and other
requirements, without waiver, modification or amendment of any material term, condition or agreement, and that, in the course of obtaining the necessary governmental, regulatory or third party approvals, consents, releases, waivers and agreements
for the Offer, no delay, limitation, restriction or condition, including any divestiture requirements, amendments or modifications, will be imposed or occur that would be meaningful in any respect to SEB Corporate Finances analyses or this
opinion. Representatives of Meda have advised SEB Corporate Finance, and SEB Corporate Finance has assumed, that the final terms and conditions of the Offer will not vary materially from those set forth in the draft of the Offer press release
reviewed by SEB Corporate Finance. SEB Corporate Finance is not expressing any opinion with respect to accounting, tax, regulatory, legal or similar matters and it has relied upon the assessments of representatives of Meda as to such matters.
This opinion does not address any terms (other than the Offer Consideration to the extent expressly specified herein) or other aspects or implications of the
Offer, including, without limitation, the form or structure of the Offer, the form of the Offer Consideration or any terms, aspects or implications of any shareholders, non-competition, non-solicitation, non-hire or non-disruption or other
agreement, arrangement or understanding to be entered into in connection with or contemplated by the Offer or otherwise. SEB Corporate Finances assignment does not include expressing an opinion on the underlying business decision of Meda to
effect the Offer, the relative merits of the Offer as compared to any alternative business strategies that might exist for Meda, including whether any other transaction would potentially be more favorable for the shareholders of Meda, or the effect
of any other transaction in which Meda might engage. Furthermore, SEB Corporate Finance has not been asked by the Board to, and it did not, participate in the negotiation or structuring of the Offer or explore the possibility of any offer from
another party as regards Meda or any part thereof. SEB Corporate Finance also expresses no view as to, and this opinion does not address, the fairness (financial or otherwise) of the amount or
I-2
nature or any other aspect of any compensation to any
officers, directors or employees of any parties to the Offer, or any class of such persons, relative to the Offer Consideration or otherwise.
SEB
Corporate Finances opinion is based upon current market, economic, financial and other conditions as in effect on, and upon the information made available as of, the date hereof. Any change in such conditions or information may require a
revaluation of this opinion. Although subsequent developments may affect this opinion, SEB Corporate Finance has no obligation to update, revise or reaffirm this opinion. This opinion does not include any assessment as to the actual value of Mylan
shares when issued or the prices at which Meda shares, Mylan shares or any other securities will trade or otherwise be transferable at any time, including following announcement or consummation of the Offer.
Skandinaviska Enskilda Banken AB (SEB) is a leading bank in the Nordic market and offers Meda and other clients various financial services,
including providing and arranging loans. Furthermore, SEB has operations within securities trading and brokerage, equity research and corporate finance. In the ordinary course of business within securities trading and brokerage, SEB or any of its
affiliates may, at any point in time, hold long or short positions in, and may for its own or its clients accounts trade in, the shares and other securities issued by Meda or Mylan.
As a result of its position in the Nordic market, other parts of SEB, apart from SEB Corporate Finance, are at any point in time, engaged in business with
Meda, and SEB Corporate Finance has provided, and may at any point in time provide, financial advice to Meda regarding other transactions. As the Board is aware, SEB, including SEB Corporate Finance, and its affiliates in the past have provided,
currently are providing and in the future may provide investment banking, commercial banking and other similar financial services to Meda and its affiliates unrelated to the proposed Offer, for which services SEB and its affiliates have received and
expect to receive compensation, including, during the past two years, having acted or acting as (i) lead manager for a rights issue of Meda and (ii) a lender under a credit facility of Meda. Although SEB and its affiliates had not provided
investment banking, commercial banking and other similar financial services to Mylan during the past two years for which SEB or its affiliates received or expect to receive compensation, SEB and its affiliates may provide such services to Mylan and
its affiliates in the future, for which services SEB and its affiliates would expect to receive compensation.
SEB Corporate Finance will receive a fixed
fee for this opinion, irrespective of the outcome of the Offer. In addition, Meda has agreed to reimburse SEB Corporate Finances expenses and to indemnify SEB Corporate Finance against certain liabilities arising out of its engagement.
SEB Corporate Finances advisory services and this opinion are provided for the information of and assistance to the Board in connection with its
consideration of the Offer and does not constitute a recommendation as to whether the shareholders of Meda should accept the Offer or how any such shareholder should act on any matters relating to the proposed Offer or otherwise.
Based upon the foregoing and such other matters that SEB Corporate Finance deems relevant, it is SEB Corporate Finances opinion that, as of the date
hereof, the Offer Consideration to be received in the Offer by shareholders of Meda is fair, from a financial point of view, to such shareholders.
Stockholm, February 10, 2016
SEB Corporate Finance, Skandinaviska Enskilda Banken AB (publ)
I-3
APPENDIX II
PROFIT FORECAST
Mylan issued the following guidance (the Guidance) in a public statement on February 10, 2016 with its fourth quarter earnings release for
fiscal year 2015:
Adjusted diluted EPS
*
is expected to be in the range of $4.85 to $5.15.
*Adjusted diluted EPS is a non-GAAP measure and is calculated as U.S. GAAP diluted earnings per share adjusted for certain items, including
purchase accounting related amortization (primarily included in cost of sales); litigation settlements, net; interest expense, primarily non-cash accretion and certain other financing related costs; fair value adjustments of contingent consideration
liability; clean energy investments pre-tax loss; acquisition related costs (primarily included in cost of sales and selling, general and administrative expense); certain milestone payments; restructuring and other special items included in: cost of
sales, research and development expense, selling, general and administrative expense and other income (expense), net; and tax effect of the above items and other income tax related items.
Mylans public statement on February 10, 2016 also included a reconciliation of adjusted diluted EPS to U.S. GAAP diluted earnings per
share which is expected to be in the range of $2.38 to $2.43 for the year ending December 31, 2016. For more information, including a quantitative reconciliation of the Guidance to projected U.S. GAAP diluted earnings per share for the year ending
December 31, 2016, see Appendix III to this prospectus.
The Guidance has been prepared on a basis consistent with the accounting policies
adopted by Mylan which are in accordance with U.S. GAAP and those adopted in the preparation of the consolidated financial statements for the year ended December 31, 2015, and those expected to be adopted in the consolidated financial
statements for the year ending December 31, 2016.
The principal assumptions upon which the Guidance is based are set out below:
The assumptions that are within Mylans influence or control are:
|
|
|
No material future mergers and acquisitions opportunities, disposals, partnerships, or changes to Mylans existing capital structure other than from normal product licensing or acquisition arrangements.
|
|
|
|
There will be no material further restructurings.
|
|
|
|
The integration of, and the synergy realization with respect to, acquisitions proceeding as planned and not being more difficult, time-consuming or costly than expected.
|
The assumptions that are not within Mylans influence or control are:
|
|
|
There will be no material change in the ownership of and control of Mylan.
|
|
|
|
There will be no material change in general trading conditions, economic conditions, competitive environment or levels of demand in the countries in which Mylan operates or trades which would materially affect
Mylans business.
|
II-1
|
|
|
There will be no adverse outcome to any litigation or government investigation.
|
|
|
|
There will be no business interruptions that materially affect Mylan, its key customers or its key suppliers in any of its major markets.
|
|
|
|
There will be no material change to Mylan customers obligations or their ability or willingness to meet their obligations to Mylan from that currently anticipated by Mylan.
|
|
|
|
There will be no changes in exchange rates, interest rates, bases of taxes, tax laws or interpretations, or legislative or regulatory requirements from those currently prevailing that would have a material impact on
Mylans operations or its accounting policies.
|
|
|
|
The timing of entrance of product competition in 2016.
|
|
|
|
The timing of planned product launches in 2016.
|
II-2
APPENDIX III
NON-GAAP FINANCIAL MEASURES
Overview
This prospectus includes the
presentation and discussion of certain financial information that differs from what is reported under U.S. GAAP. These non-GAAP financial measures, including combined 2015 adjusted EBITDA, 2017 adjusted diluted EPS accretion attributable to the
transaction, pro forma debt to pro forma LTM adjusted EBITDA at close, pro forma adjusted earnings, pro forma adjusted free cash flow and adjusted diluted EPS for the year ending December 31, 2016, are presented in order to supplement Meda
shareholders, investors and other readers understanding and assessment of the financial performance and financial condition of Mylan and, assuming the transaction will be completed, the Combined Company. Such non-GAAP financial
measures can be divided into two categories, historical measures and forward-looking measures.
Historical non-GAAP financial measures are derived from
the historical financial information of Mylan and Meda and include combined 2015 adjusted EBITDA. See below for a quantitative reconciliation of this historical non-GAAP and non-IFRS financial measure to its most directly comparable U.S. GAAP and
IFRS measure.
1
Forward-looking non-GAAP measures are derived from the projected future operating
results and financial condition of Mylan or the Combined Company and include 2017 adjusted diluted EPS accretion attributable to the transaction, pro forma debt to pro forma LTM adjusted EBITDA at close, pro forma adjusted earnings, pro forma
adjusted free cash flow and adjusted diluted EPS for the year ending December 31, 2016. Set forth below, Mylan has provided a quantitative reconciliation of adjusted diluted EPS for the year ended December 31, 2016 and, for the reasons
indicated, qualitative reconciliations of 2017 adjusted diluted EPS accretion attributable to the transaction, pro forma debt to pro forma LTM adjusted EBITDA at close, pro forma adjusted earnings and pro forma adjusted free cash flow.
Mylans management uses, and if the transaction is completed, the management of the Combined Company will use, non-GAAP financial measures internally for
forecasting, budgeting and measuring its operating performance. The Mylan Board also used (among other things) non-GAAP financial measures to evaluate the transaction. See Background and Reasons for the OfferMylans Reasons for the
Offer.
Primarily due to acquisitions, Mylan believes that an evaluation of its ongoing operations (and comparisons of its current operations with
historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with U.S. GAAP. Mylan also believes that including EBITDA and supplemental adjustments
applied in presenting adjusted EBITDA pursuant to Mylans debt agreements is appropriate to provide additional information to investors to demonstrate Mylans ability to comply with financial debt covenants (which are calculated using a
measure similar to adjusted EBITDA) and assess Mylans ability to incur additional indebtedness. Actual internal and forecasted operating results and annual budgets include adjusted earnings and adjusted diluted EPS, and the financial
performance of Mylan is measured by senior management on this basis along with other performance metrics. Managements annual incentive compensation is derived in part based on the adjusted diluted EPS and adjusted free cash flow metrics. Meda
shareholders, investors and other readers are encouraged to review the related U.S. GAAP measures and the reconciliations of the non-GAAP measures to their most directly comparable U.S. GAAP measures set forth below, and Meda shareholders, investors
and other readers should consider non-GAAP measures only as supplements to, not as substitutes for or as superior measures to, the measures of financial performance prepared in accordance with U.S. GAAP. In addition, the non-GAAP financial measures
should be read in conjunction with the historical financial information of Mylan and Meda included in and incorporated by reference into this
1
|
Combined Company figures represent an aggregation of Mylan figures derived from financial information prepared in accordance with U.S. GAAP and Meda figures derived from financial information prepared in accordance with
IFRS as issued by the IASB and do not reflect pro forma adjustments (including no elimination of transactions between Mylan and Meda).
|
III-1
prospectus, the section of this prospectus entitled Unaudited Pro Forma Financial Information and the risks discussed in the sections of this prospectus entitled Risk Factors
Related to Mylan and the Offer, Risk Factors Related to Meda and Forward-Looking Statements.
Reconciliations
Opportunity to Achieve $0.35 to $0.40 of Adjusted Diluted EPS Accretion in 2017
The stated forward-looking non-GAAP financial measure, opportunity to achieve $0.35 to $0.40 of adjusted diluted EPS accretion in 2017, is based on projected
adjusted earnings in 2017 for both Mylan and Meda, a projection of operating synergies to be realized over such period and projected diluted Mylan Shares outstanding.
Because this forward-looking non-GAAP financial measure is derived from projections, to reconcile such measure to the most directly comparable U.S. GAAP
measure, Mylan would need projections for the applicable periods or as of the applicable dates for such directly comparable U.S. GAAP measure. Because such stated opportunity was developed by Mylan on an adjusted basis, Mylan has not previously
projected, for the applicable periods or as of the applicable dates, the most directly comparable U.S. GAAP measure for 2017 adjusted diluted EPS accretion attributable to the transaction. Furthermore, to develop such projections would require
unreasonable efforts, due primarily to the difficulty of making accurate and detailed forecasts and projections of purchase accounting-related amounts, as acquisition accounting is dependent upon certain valuations and other studies that have yet to
progress to a stage where there is sufficient information for a definitive measurement. In addition, the historical financial statements of Meda are not prepared on a U.S. GAAP basis. Upon completion of the proposed acquisition of Meda, Mylan will
review, in detail, Medas accounting policies, including conforming Medas accounting policies to U.S. GAAP. As a result, Mylan has not provided a quantitative reconciliation to the most directly comparable U.S. GAAP measure (projected
U.S. GAAP diluted EPS accretion (dilution) attributable to the transaction for 2017), as providing such a reconciliation would require unreasonable efforts.
Mylan does not currently have sufficient information to project the accretive or dilutive impact of the transaction on U.S. GAAP diluted EPS for 2017. The key
factors that will impact whether the transaction is accretive or dilutive on a U.S. GAAP basis in 2017 include the positive impact of the realization of expected operating synergies on U.S. GAAP diluted EPS weighed against the negative impact of
purchase accounting adjustments for the transaction, including transaction related costs, an expected increase in amortization due to the acquisition of intangible assets in the transaction and any increase in cost of goods sold related to the
step-up in the book value of acquired inventory.
For a reconciliation of forecasted adjusted diluted EPS for the year ending December 2016 to U.S. GAAP
diluted EPS, see Adjusted Diluted EPS Guidance for the Year Ending December 31, 2016 below.
Pro Forma Leverage of 3.8x
Debt-to-Adjusted EBITDA at Close
The stated forward-looking non-GAAP financial measure, pro forma leverage at close of 3.8x debt-to-adjusted EBITDA,
is based on the ratio of (i) pro forma debt at September 30, 2016, the assumed closing date of the transaction (which projection includes (x) debt projected to be incurred by Mylan in the transaction (including refinancing existing
Meda debt at the principal amount outstanding), (y) the rollover of existing Mylan debt and (z) an estimate that Mylan will utilize a portion of its cash on hand in connection with the Offer, but does not take into account any additional
acquisition or other transactional activities that Mylan may pursue) to (ii) pro forma LTM adjusted EBITDA at close (which projection includes projected LTM adjusted EBITDA at close for each of Mylan and Meda, plus a projection of operating
synergies to be realized in 2016).
Because this forward-looking non-GAAP financial measure is derived from projections, to reconcile such measure to the
most directly comparable U.S. GAAP measure, Mylan would need projections for the applicable periods or as of the applicable dates for such directly comparable U.S. GAAP measure. Because this measure
III-2
was developed by Mylan on an adjusted basis, Mylan has not previously projected, for the applicable periods or as of the applicable dates, the most directly comparable U.S. GAAP measure for pro
forma debt to pro forma LTM adjusted EBITDA at close. Furthermore, to develop such projections would require unreasonable efforts, due primarily to the difficulty of estimating debt levels for both Mylan and Meda, uncertainty regarding the impact of
other potential acquisition activity and the timing of closing, and the historical financial statements of Meda not being prepared on a U.S. GAAP basis. Upon completion of the proposed acquisition of Meda, Mylan will review, in detail, Medas
accounting policies, including conforming Medas accounting policies to U.S. GAAP. As a result, Mylan has not provided a quantitative reconciliation to the most directly comparable U.S. GAAP measure (pro forma U.S. GAAP debt to pro forma LTM
U.S. GAAP net earnings attributable to Mylan N.V. at September 30, 2016), as providing such a reconciliation would require unreasonable efforts.
In
addition, as EBITDA and Adjusted EBITDA are often used as proxies for estimated cash flow from operating activities, another important U.S. GAAP comparison to consider is U.S. GAAP combined cash flows from operations. For the reasons discussed,
Mylan has not prepared projected U.S. GAAP operating cash flows. However, Mylans U.S. GAAP cash flow from operations plus Medas IFRS cash from operations on a 2015 combined basis would have been $2.4 billion.
Transaction Expected to be Immediately Accretive to Adjusted Earnings
The stated forward-looking non-GAAP financial measure, pro forma adjusted earnings, is based on projected adjusted earnings for both Mylan and Meda. Because
Mylan did not quantify the amount of immediate expected accretion to adjusted earnings, Mylan has not provided a quantitative reconciliation to the most directly comparable U.S. GAAP measure (U.S. GAAP net earnings attributable to Mylan N.V.).
As stated, the transaction is expected to be immediately accretive to Mylan adjusted earnings, with accretion to adjusted earnings increasing significantly
after the first full year (2017) as synergies are realized. However, Mylan expects that the transaction will not be immediately accretive to U.S. GAAP net earnings attributable to Mylan N.V., primarily due to the expected negative impact on U.S.
GAAP net earnings attributable to Mylan N.V. of purchase accounting adjustments for the transaction, including transaction related costs and an expected increase in amortization due to the acquisition of intangible assets in the transaction and an
expected increase in cost of goods sold related to the step-up in the book value of acquired inventory.
Combined 2015 Adjusted EBITDA of Approximately
$3.8 Billion
The stated historical non-GAAP financial measure, combined 2015 adjusted EBITDA, is based on the sum of (i) $3,012.1 million of 2015
adjusted EBITDA for Mylan and (ii) $764.9 million 2015 adjusted EBITDA for Meda (translated from SEK to USD at an exchange rate of 0.118). The stated measure represents an aggregation of Mylan figures derived from financial information prepared
in accordance with U.S. GAAP and Meda figures derived from financial information prepared in accordance with IFRS as issued by the IASB and does not reflect pro forma adjustments (including no elimination of transactions between Mylan and Meda).
III-3
Below is a reconciliation of Mylans contribution to the stated approximation of $3.8 billion in 2015
adjusted EBITDA for the Combined Company to the most directly comparable U.S. GAAP measure (U.S. GAAP net earnings attributable to Mylan N.V.) for the year ended December 31, 2015 (in millions):
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
(Unaudited; in millions)
|
|
2015
|
|
U.S. GAAP net earnings attributable to Mylan N.V.
|
|
$
|
847.6
|
|
Add adjustments:
|
|
|
|
|
Net contribution attributable to the noncontrolling interest and equity method
investments
|
|
|
105.2
|
|
Income taxes
|
|
|
67.7
|
|
Interest expense
|
|
|
339.4
|
|
Depreciation and amortization
|
|
|
1,032.1
|
|
|
|
|
|
|
EBITDA
|
|
$
|
2,392.0
|
|
Add / (deduct) adjustments:
|
|
|
|
|
Share- based compensation expense
|
|
|
92.8
|
|
Litigation settlements, net
|
|
|
(97.4
|
)
|
Restructuring & other special items
|
|
|
624.7
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
3,012.1
|
|
|
|
|
|
|
For a reconciliation of Medas contribution to the stated approximation of $3.8 billion in 2015 adjusted EBITDA for the
Combined Company to the most directly comparable IFRS measure (Medas IFRS operating profit for 2015), see Meda Managements Discussion and Analysis of Financial Position and Results of Operations of MedaItems Affecting
Comparability. All Medas contributions to Combined Company figures have been translated to USD at a SEK/USD exchange rate of 0.118.
Adjusted Diluted EPS Guidance for the Year Ending December 31, 2016
The reconciliation below is based on managements estimate of adjusted net earnings and adjusted diluted EPS for the year ending December 31, 2016.
Mylan expects certain known U.S. GAAP amounts for 2016, as presented in the reconciliation below. Other U.S. GAAP charges, including those related to potential litigation, asset impairments and restructuring programs that would be excluded from the
adjusted results are possible, but their amounts are dependent on numerous factors that Mylan currently cannot ascertain with sufficient certainty or are presently unknown. These U.S. GAAP charges are dependent upon future events and valuations that
have not yet occurred or been performed. The unaudited forecasted amounts presented below are stated in millions, except for earnings per share data.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31, 2016
|
|
|
|
Lower
|
|
|
Upper
|
|
U.S. GAAP net earnings attributable to Mylan N.V. and U.S. GAAP diluted EPS
|
|
$
|
1,235
|
|
|
$
|
2.38
|
|
|
$
|
1,290
|
|
|
$
|
2.43
|
|
Purchase accounting related amortization
|
|
|
1,000
|
|
|
|
|
|
|
|
1,050
|
|
|
|
|
|
Interest expense
|
|
|
60
|
|
|
|
|
|
|
|
70
|
|
|
|
|
|
Pre-tax loss of clean energy investments
|
|
|
90
|
|
|
|
|
|
|
|
100
|
|
|
|
|
|
R&D milestone payments
|
|
|
100
|
|
|
|
|
|
|
|
125
|
|
|
|
|
|
Restructuring, acquisition and other special items
|
|
|
270
|
|
|
|
|
|
|
|
375
|
|
|
|
|
|
Tax effect of the above items and other income tax related items
|
|
|
(230
|
)
|
|
|
|
|
|
|
(285
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net earnings attributable to Mylan N.V. and adjusted diluted EPS
|
|
$
|
2,525
|
|
|
$
|
4.85
|
|
|
$
|
2,725
|
|
|
$
|
5.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
III-4
Significant Adjusted Free Cash Flows Generated by the Combined Company
The stated forward-looking non-GAAP financial measure, adjusted free cash flows, is based on projected adjusted free cash flows for both Mylan and Meda.
Because Mylan did not quantify the amount of significant adjusted free cash flows to be generated by the Combined Company, Mylan has not provided a quantitative reconciliation to the most directly comparable U.S. GAAP measure (U.S. GAAP net cash
provided by operating activities). Based upon historical levels of operating cash flow for Mylan and Meda, the Combined Company is expected to generate significant U.S. GAAP net cash provided by operating activities.
Adjusted free cash flow is a non-GAAP measure calculated as U.S. GAAP net cash provided by operating activities, adjusted for certain items. The significant
items excluded from adjusted free cash flow include net litigation settlements, certain financing costs, acquisition related costs, certain research and development, and income tax items, capital expenditures and proceeds from the sale of property,
plant and equipment.
III-5
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Mylan is a public limited liability company (
naamloze vennootschap
) organized and existing under the laws of the Netherlands.
Without prejudice to any indemnity to which such person may be contractually or otherwise entitled and to the fullest extent permitted by applicable Dutch
law, as the same exists or may be amended (but, in the case of such amendment, only to the extent that such amendment permits Mylan to provide broader indemnification rights than such law permitted the Registrant to provide prior to such amendment),
Mylans articles of association provide that Mylan will indemnify any director or officer who was, is, or becomes in his or her capacity as director or officer a party or witness or is or becomes threatened to be made a party or witness to any
threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, or administrative or any action, suit, or proceeding in order to obtain information, against any and all liabilities including all expenses (including
attorneys fees), judgments, fines, amounts paid in settlement, and other financial losses, actually and reasonably incurred by him or her in connection with such action, suit, or proceeding.
Under Dutch law, indemnification generally will not be available to any person in respect of any claim, issue, or matter as to which such person will have
been adjudged in a final and non-appealable judgment by a Dutch or other court of competent jurisdiction to be liable for intentional recklessness or willful misconduct in the performance of his or her duty to the Registrant unless such court
determines that such person is fairly and reasonably entitled to such indemnification despite the adjudication of such liability, or to the extent any related costs and losses have been insured and reimbursed to such person under any applicable
insurance policy. Also, no indemnification will be made available in respect of any claim brought by Mylan and for which the person is adjudged in a final and non-appealable judgment to be liable to Mylan unless the court or Mylan shall have
determined that indemnification of some or all expenses incurred by such person is appropriate and permitted under applicable law.
Mylan also has entered
into indemnification agreements with each of its directors and certain of its officers that provide them with substantially similar indemnification rights to those provided under Mylans articles of association.
Mylans articles of association also provide that Mylan may maintain an insurance policy which insures directors and officers against certain liabilities
which might be incurred in connection with the performance of their duties. Mylan currently maintains such a policy. The description of indemnity herein is merely a summary of the provisions in Mylans articles of association and other
indemnification agreements, and such description shall not limit or alter the provisions in Mylans articles of association or other indemnification agreements.
Item 21. Exhibits and Financial Statement Schedules.
See the Exhibit Index.
|
(b)
|
Financial Statement Schedules.
|
None.
|
(c)
|
Reports, Opinions and Appraisals.
|
None.
II-1
Item 22. Undertakings.
|
(a)
|
The undersigned registrant hereby undertakes:
|
|
(1)
|
To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
|
|
(i)
|
to include any prospectus required by section 10(a)(3) of the Securities Act of 1933.
|
|
(ii)
|
to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) promulgated under the Securities Act of 1933 if, in the aggregate,
the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective Registration Statement; and
|
|
(iii)
|
to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.
|
|
(2)
|
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
|
(3)
|
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
|
|
(b)
|
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrants annual report pursuant to section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plans annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
|
(c)
|
(1) The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form.
|
|
(2)
|
The undersigned registrant hereby undertakes that every prospectus (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of section 10(a)(3) of the Securities
Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the Registration Statement and will not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
|
|
(d)
|
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against
|
II-2
|
public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
|
|
(e)
|
The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date
of responding to the request.
|
|
(f)
|
The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
|
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Pittsburgh, State of Pennsylvania on April 11, 2016.
|
|
|
|
|
MYLAN N.V.,
|
|
|
by
|
|
/s/ PAUL B. CAMPBELL
|
|
|
Name:
|
|
PAUL B. CAMPBELL
|
|
|
Title:
|
|
Senior Vice President and Chief Accounting Officer
|
AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Pursuant to the requirements of the Securities Act of 1933, as amended, Mylan N.V. has duly caused this Registration Statement on Form S-4 to be signed by the
following duly authorized representative in the United States:
|
|
|
|
|
MYLAN N.V.,
|
|
|
by
|
|
/s/ PAUL B. CAMPBELL
|
|
|
Name:
|
|
PAUL B. CAMPBELL
|
|
|
Title:
|
|
Senior Vice President and Chief Accounting Officer
|
POWER OF ATTORNEY
Each of the undersigned officers and directors of Mylan N.V., a public limited liability company (
naamloze vennootschap
) organized and existing under
the laws of the Netherlands, hereby constitutes and appoints Paul B. Campbell as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, in his or her name and on his or her behalf, in any and all
capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power of authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in
person, thereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been
signed by the following persons in the capacities and on the dates indicated:
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
/s/ HEATHER BRESCH
|
|
Chief Executive Officer and Executive Director
|
|
April 11, 2016
|
Heather Bresch
|
|
(Principal Executive Officer)
|
|
|
|
|
|
/s/ PAUL B. CAMPBELL
|
|
Senior Vice President and Chief Accounting Officer
|
|
April 11, 2016
|
Paul B. Campbell
|
|
(Principal Financial Officer and Principal Accounting Officer)*
|
|
|
|
|
|
/s/ ROBERT J. COURY
|
|
Executive Chairman and Non-Executive Director
|
|
April 11, 2016
|
Robert J. Coury
|
|
|
|
|
|
|
|
/s/ RODNEY L. PIATT
|
|
Vice Chairman, Lead Independent Director and Non-Executive Director
|
|
April 11, 2016
|
Rodney L. Piatt
|
|
|
|
|
|
|
|
/s/ WENDY CAMERON
Wendy Cameron
|
|
Non-Executive Director
|
|
April 11, 2016
|
|
|
|
/s/ ROBERT J. CINDRICH
Robert J. Cindrich
|
|
Non-Executive Director
|
|
April 11, 2016
|
|
|
|
/s/ JOELLEN LYONS DILLON
JoEllen Lyons Dillon
|
|
Non-Executive Director
|
|
April 11, 2016
|
|
|
|
/s/ NEIL DIMICK
Neil Dimick
|
|
Non-Executive Director
|
|
April 11, 2016
|
|
|
|
/s/ MELINA HIGGINS
Melina Higgins
|
|
Non-Executive Director
|
|
April 11, 2016
|
|
|
|
/s/ DOUGLAS J. LEECH
Douglas J. Leech
|
|
Non-Executive Director
|
|
April 11, 2016
|
|
|
|
/s/ RAJIV MALIK
Rajiv Malik
|
|
President and Executive Director
|
|
April 11, 2016
|
|
|
|
/s/ JOSEPH C. MAROON, M.D.
Joseph C. Maroon, M.D.
|
|
Non-Executive Director
|
|
April 11, 2016
|
|
|
|
/s/ MARK W. PARRISH
Mark W. Parrish
|
|
Non-Executive Director
|
|
April 11, 2016
|
|
|
|
/s/ RANDALL L.VANDERVEEN, PH.D.
Randall L. Vanderveen, Ph.D.
|
|
Non-Executive Director
|
|
April 11, 2016
|
*
|
Note: John D. Sheehan resigned as Chief Financial Officer and principal financial officer of Mylan N.V. effective as of April 1, 2016. Paul B. Campbell is the person performing a similar function to that of the
principal financial officer as of the date of this Registration Statement.
|
EXHIBIT INDEX
|
|
|
Exhibit
Number
|
|
Descriptions
|
|
|
2.1
|
|
Irrevocable Undertaking dated February 10, 2016, between Mylan N.V. and Stena Sessan Rederi AB, filed as Exhibit 2.1 to the Mylan N.V. Current Report on Form 8-K filed on February 17, 2016, and incorporated herein by
reference.
|
|
|
2.2
|
|
Irrevocable Undertaking dated February 10, 2016, between Mylan N.V. and Fidim S.r.l, filed as Exhibit 2.2 to the Mylan N.V. Current Report on Form 8-K filed on February 17, 2016, and incorporated herein by reference.
|
|
|
2.3
|
|
Shareholder Agreement dated February 10, 2016, between Mylan N.V. and Stena Sessan Rederi AB, filed as Exhibit 2.3 to the Mylan N.V. Current Report on Form 8-K filed on February 17, 2016, and incorporated herein by
reference.
|
|
|
2.4
|
|
Shareholder Agreement dated February 10, 2016, between Mylan N.V. and Fidim S.r.l, filed as Exhibit 2.4 to the Mylan N.V. Current Report on Form 8-K filed on February 17, 2016, and incorporated herein by reference.
|
|
|
3.1
|
|
Articles of Association of Mylan N.V., filed as Exhibit 3.1 to the Mylan N.V. Current Report on Form 8-K filed on February 27, 2015, and incorporated herein by reference.
|
|
|
5.1
|
|
Opinion of NautaDutilh N.V regarding the legality of the Mylan ordinary shares.
|
|
|
10.1
|
|
Bridge Credit Agreement dated as of February 10, 2016 among Mylan N.V., as borrower, Mylan Inc., as a guarantor, Deutsche Bank AG Cayman Islands Branch, as administrative agent and a lender, Goldman Sachs Bank USA, as a lender,
Goldman Sachs Lending Partners LLC, as a lender, and other lenders party thereto from time to time, filed as Exhibit 10.1 to the Mylan N.V. Current Report on Form 8-K filed on February 17, 2016, and incorporated herein by reference.
|
|
|
21.1
|
|
Subsidiaries of Mylan N.V., filed as Exhibit 21.1 to the Mylan N.V. Annual Report on Form 10-K for the year ended December 31, 2015 filed on February 16, 2016, and incorporated herein by reference.
|
|
|
23.1
|
|
Consent of Deloitte & Touche LLP, independent registered public accounting firm.
|
|
|
23.2
|
|
Consent of PricewaterhouseCoopers AB, independent auditor.
|
|
|
23.3
|
|
Consent of NautaDutilh N.V. (included in the opinion filed as Exhibit 5.1).
|
|
|
24.1
|
|
Power of Attorney (included on the signature pages hereto).
|
|
|
99.1
|
|
Consent of SEB Corporate Finance, Skandinaviska Enskilda Banken AB, financial advisor to Meda AB
|
Mylan NV (NASDAQ:MYL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Mylan NV (NASDAQ:MYL)
Historical Stock Chart
From Apr 2023 to Apr 2024