Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) in one of its biggest and important deals, announced Monday of it plans to acquire Bausch & Lomb for $8.7 billion.
The acquisition of the privately held ophthalmology business marks the biggest of the 60 takeovers made by Michael Pearson since he took over the leadership at Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) five years ago. This strategy followed by Pearson of acquisitions fuelled by debt has helped in enhancing the groups share price.
The deal will help in the annual savings of $800 million by 2014 and will start generating cash from the very first year.
Valeant terms of the deal
As per the deal, speciality pharmaceuticals group Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) will pay the $4.2 billion outstanding loan of Bausch & Lomb’s. Apart from paying off the loan, Valeant will pay $4.5 billion in cash to the current owners, including private-equity firm Warburg Pincus.
The transaction, which will create an eye care business with revenues of more than $3.5 billion for 2013, will be financed with a debt of $1.5 billion and equity of $2 billion.
Bausch & Lomb will keep its brand and division, and Valeant will appoint Fred Hassan, Bausch & Lomb’s chairman and Dan Wechsler, head of its pharmaceuticals division as the chairman. Also, chief executive Brent Saunders will carry on as an adviser until the deal is concluded.
Mr Saunders said: “Valeant’s acquisition of our company is a testament to the tremendous value our talented employees have created over the past several years.”
Mr Pearson said that Bausch & Lomb is a popular name with a specialty in eye care products and a “promising late-stage pipeline” will be a great fit to the company’s ophthalmology business, and we “are strongly committed to continuing to build a sustainable eye health business.” The deal will help Valeant to become a global leader in dermatology and eye health segment he added.
Active healthcare industry
The Bermuda based Valeant prior to this made a failed bid for Actavis Inc (NYSE:ACT), the generic drugs company. The deal also comes at a crucial time of consolidation in the healthcare sector. In other deals in the healthcare sector, Actavis is planning to acquire Warner Chilcott of Ireland and Pfizer Inc. (NYSE:PFE) revealed last week of its plans to offload remaining 80 per cent stake of Zoetis, its animal health division
On Monday, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX)’s stocks were up 7.5 percent to $93.58 in Toronto, and since Friday, at the time of first reports on a possible deal, shares have gained 22 percent.