Acquisitions

Agila Specialties

On February 27, 2013, the Company announced that it had signed definitive agreements to acquire the Agila Specialties business (“Agila”), a developer, manufacturer and marketer of high-quality generic injectable products, from Strides Arcolab Limited (“Strides Arcolab”). The transaction closed on December 4, 2013, and the total purchase price was approximately $1.43 billion (net of cash acquired of $3.4 million), which includes estimated contingent consideration of $250 million. The contingent consideration, which could total a maximum of $461 million, is primarily related to the satisfaction of certain regulatory conditions, including potential regulatory remediation costs and the resolution of certain pre-acquisition contingencies. The acquisition of Agila significantly expands and strengthens Mylan's existing injectables platform and portfolio, and also provides Mylan entry into certain new geographic markets.

In accordance with GAAP, the Company used the purchase method of accounting to account for this transaction. Under the purchase method of accounting, the assets acquired and liabilities assumed in the transaction were recorded at their respective estimated fair values at the acquisition date. The following table summarizes the preliminary fair values of the tangible and identifiable intangible assets acquired and liabilities assumed at acquisition date, with the excess being allocated to goodwill. At March 31, 2014, certain amounts have not been finalized including the determination of certain contingent consideration, certain contingent liabilities, including income and non-income based tax contingencies and deferred income taxes. The finalization of these matters may result in changes to goodwill and the Company expects to finalize such matters during 2014. The preliminary allocation of the $1.43 billion purchase price to the assets acquired and liabilities assumed for Agila is as follows:



(In millions)	Preliminary Purchase Price Allocation as of December 4, 2013 ^(a)			Measurement Period Adjustments^(b)			Preliminary Purchase Price Allocation as of March 31, 2014 (as adjusted)
Current assets (excluding inventories)	$	39.0		$	6.5		$	45.5
Inventories	45.1			(7.8		)	37.3
Property, plant and equipment	143.8			2.4			146.2
Identified intangible assets	280.0			—			280.0
In-process research and development	436.0			—			436.0
Other assets (including equity method investment)	153.4			(0.6		)	152.8
Goodwill	884.2			48.6			932.8
Total assets acquired	1,981.5			49.1			2,030.6
Current liabilities	(234.7		)	(7.3		)	(242.0		)
Deferred tax liabilities	(193.2		)	(38.0		)	(231.2		)
Other non-current liabilities	(119.9		)	(3.8		)	(123.7		)
Net assets acquired	$	1,433.7		$	—		$	1,433.7

____________

^(a) As previously reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

^(b)

The measurement period adjustments are related to 1) certain working capital adjustments to reflect facts and circumstances existing as of the acquisition date and; 2) adjustments related to deferred taxes to reflect the allocation of assets and liabilities to various legal entities. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements and accordingly, the Company has not retrospectively adjusted those financial statements.

The amount allocated to in-process research and development (“IPR&D”) represents an estimate of the fair value of purchased in-process technology for research projects that, as of the closing date of the acquisition, had not reached technological feasibility and had no alternative future use. The fair value of the IPR&D was based on the excess earnings method, which utilizes forecasts of expected cash inflows (including estimates for ongoing costs) and other contributory charges. A discount rate of 13.0% was utilized to discount net cash inflows to present values. IPR&D is accounted for as an indefinite-lived intangible asset and will be subject to impairment testing until completion or abandonment of the projects. Upon successful completion and launch of each product, the Company will make a determination of the estimated useful life of the individual IPR&D asset. The acquired IPR&D projects are in various stages of completion and the estimated costs to complete these projects total approximately $50 million which is expected to be incurred from 2014 through 2016. There are risks and uncertainties associated with the timely and successful completion of the projects included in IPR&D, and no assurances can be given that the underlying assumptions used to estimate the fair value of IPR&D will not change or the timely completion of each project to commercial success will occur.

The identified intangible assets of $280 million are comprised of $221 million of product rights and licenses that have a weighted average useful life of 8 years and $59 million of customer relationships that have a weighted average useful life of 5 years. The equity method investment of $125 million represents the fair value of Agila’s 50% interest in Sagent Agila LLC (“Sagent Agila”). Payments for product rights and other, net on the Condensed Consolidated Statements of Cash Flows includes payments totaling $120 million to acquire certain commercialization rights in the U.S. and other countries. The goodwill of $933 million arising from the acquisition consisted largely of the value of the employee workforce and the value of products to be developed in the future. All of the goodwill was assigned to Mylan’s Generics segment. None of the goodwill recognized is currently expected to be deductible for income tax purposes.

Significant assumptions utilized in the valuation of identified intangible assets, the equity method investment and IPR&D were based on company specific information and projections which are not observable in the market and are thus considered Level 3 measurements as defined by GAAP. The preliminary fair value estimates for the assets acquired and liabilities assumed were based upon preliminary calculations, valuations and assumptions that are subject to change as the Company obtains additional information during the measurement period (up to one year from the acquisition date). The primary areas of those preliminary estimates that are not yet finalized relate to the determination of certain contingent consideration, certain contingent liabilities, including income and non-income based tax contingencies and deferred income taxes.

Pro Forma Financial Results

The following table presents supplemental unaudited pro forma information as if the acquisition of Agila had occurred on January 1, 2012. The unaudited pro forma results reflect certain adjustments related to past operating performance and acquisition accounting adjustments, such as increased amortization expense based on the fair valuation of assets acquired, the impact of acquisition financing, and the related income tax effects. The unaudited pro forma results do not include any anticipated synergies which may be achievable subsequent to the acquisition date. Accordingly, the unaudited pro forma results are not necessarily indicative of the results that actually would have occurred had the acquisition been completed on January 1, 2012, nor are they indicative of the future operating results of the combined company.



	Three months ended
(In millions, except per share amounts)	March 31, 2013
Total revenues	$	1,693.9
Net earnings attributable to Mylan Inc. common shareholders	$	84.0
Earnings per common share attributable to Mylan Inc. common shareholders
Basic	$	0.21
Diluted	$	0.21
Weighted average common shares outstanding:
Basic	393.2
Diluted	399.0