Viatris Phase 1 Asset Divestiture Story: Plans To Sell Certain OTC Products, Women's Healthcare Business & More

Viatris Inc VTRS disclosed multiple deals to sell remaining assets to conclude Phase 1 of planned asset disposition by the end of this year.

The company expects to garner gross proceeds of about $6.94 billion from all asset sales sold under the agreement, representing multiple over 12x on 2022 estimated Adjusted EBITDA. 

VTRS targets using net proceeds to reduce debt, which is projected to deliver a gross leverage target of 3.0x in H1 2024, thereby finishing all Phase 1 commitments. 

The company anticipates the deals to boost growth and shareholder returns as it enters Phase 2 of its strategic plan in 2024.

As per the terms, the combined disposition will transfer 12 facilities and over 6,000 employees (15% of its global workforce), thereby simplifying the organization.

OTC Products: In particular, the company got an offer from Cooper Consumer Health to significantly sell its Over-the-Counter (OTC) business, including two manufacturing sites in France and Italy and an R&D site in Italy.

The company planned to retain rights for Viagra, Dymista, and selected OTC products in some markets, which represents an estimated retained value of about $1.6 billion (representing an OTC multiple of 12.8x to 2022 estimated Adjusted EBITDA of $125 million from retained business). 

The sale, projected to garner gross consideration of about $2.17 billion (representing an estimated multiple of 12.8x), is expected to close in Q2 2024.

API business: VTRS also penned an agreement with Iquest Enterprises to sell its API business in India.

The company plans to retain some selective R&D capabilities in API, and the deal is projected to conclude in Q1 2024.

Women's Healthcare Business: The company also inked a deal with Insud Pharma to sell its Women's Healthcare business, mainly oral and injectable contraceptives. 

The transaction, which includes two manufacturing facilities in India, is expected to close in Q1 2024. 

Apart from these deals, in another transaction, the company planned to sell its rights to women's healthcare products Duphaston and Femoston to Theramex, with the transaction expected to close in Q4 2023.

Moreover, VTRS penned an agreement to shed commercialization rights in some non-core markets (part of the combination with Upjohn in which the company had no established infrastructure before or following the transaction), expected to close in Q4 2023.

Also Read: Viatris Q2 Earnings Beat Estimates, Multiple Sclerosis Therapy Accepted For FDA Review

Price Action: VTRS shares are trading higher by 2.33% at $10.09 premarket on the last check Monday.