The proposed transaction, which is in late-stage discussions, would see Mylan acquire a big chunk of Abbott's Europe-based mature drugs for several billion dollars, said the people, who asked not to be named because the matter is not public.
The acquisition of the foreign assets, according to some of the people, could also allow the U.S. company to change its tax address to overseas, a practice known as inversion that has become popular among healthcare companies seeking to cut their tax bills and gain access to cash held offshore.
The exact value of Mylan's bid could not be learned, but people familiar with the matter previously told Reuters that Abbott was looking to sell a portfolio of mature drugs that could fetch more than $5 billion. A deal could come as soon as next week, but the discussions are continuing and could still fall apart, the people cautioned.
Abbott's established pharmaceuticals division is headquartered in Basel, Switzerland and had 2013 sales of roughly $5 billion. About half of the sales come from emerging markets, and the remainder from other international markets. Representatives for Mylan declined to comment, while Abbott did not respond to requests for comment.
A potential deal with Abbott would come after Mylan's failed attempt to buy Swedish drugmaker Meda AB earlier this year. Meda in April rejected Mylan's revised $6.7 billion takeover bid, saying its biggest shareholder did not back a deal.
Mylan was looking to do an inversion deal partly because it was at a disadvantage compared with foreign rivals as well as other U.S. generic drugmakers that have redomiciled to a low-tax country.
Major competitors include Teva Pharmaceuticals Industries Ltd, which is based in Israel, and Actavis Plc, which re-domiciled to Ireland through a 2013 acquisition of Warner Chilcott. Both face lower tax rates.
Tax inversions allow U.S. companies, which face one of the highest tax rates in the world - a federal tax rate of 35 percent, and an overall rate that can be close to 40 percent, including state and local taxes - to move to a lower-tax country by buying or creating a new holding company.
The deal would add to a flurry of dealmaking in the healthcare sector, which more than tripled to $317.4 billion in the first half of 2014 from the same period last year.
Reuters first reported in May that Abbott has tapped Morgan Stanley to find a buyer for the off-patent drugs so that it can free up resources to invest in high-growth areas.
Other large pharmaceutical companies including GlaxoSmithKline Plc, Sanofi SA and Merck & Co Inc are also looking to shed older drugs, many of which have lost patent protection and face shrinking sales.
Faced with healthcare spending cuts and generic competition, the pharmaceutical industry is undergoing a major restructuring, with companies playing to their strengths by building up certain businesses and divesting others.
(Reporting by Soyoung Kim in New York; Editing by Chris Reese, Gunna Dickson and Diane Craft)
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