Valeant Pharmaceuticals has signed its biggest acquisition deal to date, agreeing to buy eyecare specialist Bausch + Lomb (B+L) in an all-cash transaction valued at $8.7bn.
Valeant chief executive Michael Pearson said the deal would make the combined company a major force in ophthalmic products, with B+L keeping its name and eventually incorporating Valeant’s eyecare products into its range.
Of the $8.7n price tag, $4.5bn will go to an investment group led by Warburg Pincus that currently owns B+L, while $4.2bn will be used to pay off B+L’s debt, said Valeant, which will finance the deal with a combination of borrowing and new equity.
The deal ends plans for an initial public offering for B+L, which was filed in March, and draws a line under Valeant’s former plans to merge with Actavis in a deal that would have been worth more than $13bn.
The two companies walked away from the negotiation table last month after terms could not be agreed, and Actavis subsequently forged a deal to buy Ireland’s Warner Chilcott.
Pearson told Bloomberg that the B+L deal will see the end of Valeant’s aggressive acquisition policy, at least for the remainder of 2013 while the integration of the new division takes place.
The combined company is expected to have revenues of about $3.5bn in 2013, with the bulk of that ($3.3bn) coming from B+L’s existing products in the ophthalmic pharmaceutical, contact lens and lens care product, and eye surgery categories. Valeant also said it expects to be able to trim costs by about $800m a year.
Meanwhile, the latest deal also brings former Valeant target Ista Pharmaceuticals into its stable, albeit via a circuitous route. Valeant tried to buy Ista in February 2012 but was thwarted after the eyecare specialist signed a deal with B+L instead.
B+L’s CEO Brent Saunders will join Valeant in an advisory, role while chairman Fred Hassan – formerly CEO of Schering-Plough until its takeover by Merck & Co in 2009 – will take up a position on Valeant’s board of directors.
Dan Wechsler, who is currently head of B+L’s pharmaceutical operations, has been named group chairman for ophthalmology and eye health.