Viatris announces agreements on remaining planned divestitures

Viatris announced it has received an offer for the divestiture of substantially all of its Over-the-Counter business, and has entered into definitive agreements to divest its Women’s Healthcare business, its Active Pharmaceutical Ingredients business in India and commercialization rights in certain non-core markets that were acquired as part of the Upjohn Transaction. Viatris CEO Scott A. Smith said: “I am very excited about today’s announcement as it marks an important milestone in the execution of our overall strategic plan. Not only will this bring to conclusion all of our Phase 1 commitments, including the expected achievement of our deleveraging target of 3 times gross leverage in the first half of 2024, importantly it will also set the company up extremely well as we enter into our Phase 2 strategy for 2024 and beyond. With this announcement the company has delivered on its commitment to announce agreements on all planned divestitures by the end of 2023 within the company’s previously communicated range, after considering the estimated retained value. Including gross proceeds from the company’s completed biosimilars divestiture, the company expects to realize gross proceeds representing a multiple above 12x on 2022 estimated Adjusted EBITDA for its portfolio of divested assets. The gross proceeds to the company from all divestitures under the terms of the agreements are up to $6.94B, or up to approximately $5.2B in estimated aggregate net proceeds, taking into consideration taxes and other costs, including related transaction costs. The company made the strategic decision to retain rights for Viagra, Dymista, and select OTC products in certain markets representing estimated retained value of approximately $1.6B applying the OTC multiple of 12.8x to the 2022 estimated Adjusted EBITDA of $125M attributable to the retained business. Total gross proceeds from all planned divestitures and estimated retained value are in line with the company’s previously communicated range. Viatris intends to prioritize the use of net proceeds from the divestitures for debt paydown. The application of such proceeds is expected to achieve a gross leverage target of 3.0x in the first half of 2024, completing all Viatris’ Phase 1 commitments which the company believes will position it to accelerate growth and increase shareholder return as it enters Phase 2 of its strategic plan in 2024. In addition, the company expects that completing the divestitures would substantially simplify the organization. Under the terms of the today’s announced divestitures, up to12 facilities and more than 6,000 employees, representing 15% of the company’s global workforce, may be conveyed. Viatris has received an offer from Cooper Consumer Health, a leading European over-the-counter drug manufacturer and distributor. Viatris has executed an agreement to divest its API business in India to Iquest Enterprises, a privately held pharmaceutical company, also based in India. Viatris has also executed an agreement to divest its Women’s Healthcare business, primarily related to oral and injectable contraceptives, to Insud Pharma, a Spanish multinational pharmaceutical company. Separately, in another transaction, Viatris entered into an agreement to divest its rights to women’s healthcare products Duphaston and Femoston to Theramex, a leading global specialty pharmaceutical company dedicated to women’s health. The transaction is expected to close in Q4 2023. Viatris has also executed agreements to divest commercialization rights in certain non-core markets that were part of the combination with Upjohn in which the Company had no established infrastructure prior to or following the transaction. These transactions are expected to be completed in Q4 2023.