Mumbai, Dec. 5: Mylan — the $6.8-billion global drugs giant — has held back $350 million in payments as it closed its deal with India’s Strides Arcolab for the acquisition of Bangalore-based Agila Specialities, which is a developer, manufacturer and marketer of high-quality generic injectable products.
Back in February, Mylan had struck a deal with Strides to acquire Agila for $1.6 billion with an additional payout of $250 million for satisfactory resolution of certain third-party agreements.
On Wednesday, the parties to deal restated their initial agreements under which Mylan held back $250 million from the purchase price of $1.6 billion. It also paid only $150 million of the additional contingent payment of $250 million.
Effectively, Mylan had decided to hold back $350 million from the originally agreed payout.
The $250 million held back from the purchase price of $1.6 billion “will be payable in whole or part to the global seller upon satisfaction of certain regulatory conditions,” Mylan said in a filing with the US SEC today.
“Further, $100 million of the purchase price payable to Strides at closing was placed in an escrow or other accounts in order to fund potential regulatory remediation costs. Such an amount is in addition to the escrow arrangements that were agreed to in the initial agreements,” the Mylan filing said.
In a press release, Strides said the $250 million was being held back because of a warning letter it had received from US Food and Drug Administration (USFDA) over one of its injectable facilities in Bangalore. “The company expects those contingent conditions will be satisfied sometime in 2014," it added.
Strides also said it anticipated an additional expenditure of $150 million towards “acquisition of assets from its erstwhile partners and an estimated remediation cost related to its regulatory commitments” after the USFDA’s warning letter.