Canadian drugmaker Valeant Pharmaceuticals International (NYSE:VRX) said on Monday that it agreed to buy eye care company Bausch & Lomb Holdings Inc from private equity firm Warburg Pincus LLC for $8.7 billion in an all cash deal.
According to the deal equity firm Warburg Pincus, which leads an investment group that owns Bausch & Lomb, will receive $4.5 billion in cash and remaining $4.2 billion would be used to repay Bausch & Lomb’s outstanding debt at the Rochester, N.Y.-based company.
The acquisition, which has been in talks on and off for years will help Valeant on capitalizing on "growing eye health trends driven by an aging patient population, an increased rate of diabetes and demand from emerging markets," a joint statement said, as reported by AFP.
Bausch & Lomb is by far Valeant's biggest acquisition to date, and will place it roughly among the 15 largest global pharmaceutical companies, Valeant Chief Executive Michael Pearson said in an interview with Reuters.
"This is a 160-year-old company and brand name. I think we'll be able to really leverage that," he said adding that the deal will boost Valeant's 2013 earnings.
The deal also provides the Canadian drugmaker the large scale of operations that it lacked in China and emerging markets like the Middle East, Pearson said.
The deal financed through debt and equity is expected to close in the third quarter of this year, subject to closing conditions and regulatory approvals. The deal also offsets a planned $100 million Initial Public Offering from Bausch & Lomb.
Valeant, which has been in an acquisition spree since 2010, has been pursuing deals that could give it strategic leverage in its ophthalmology and dermatology business. Quebec-based Valeant had acquired two eye care companies last year, Eyetech Inc and Visudyne.
Last month, it also made an unsuccessful bid to buy generic drugmaker Actavis Inc in an over $13 billion deal, Reuters reported citing people familiar with the matter.
Bausch & Lomb, which began as a small optical shop in 1853, now has more than 12,000 employees’ worldwide providing contact lenses, treatments for eye conditions and surgical instruments and has presence in about 100 countries.
Bausch & Lomb will retain its name and its all three segments will continue as a separate division, while Valeant's ophthalmology arm will be merged with the Bausch & Lomb division.
"I am confident that under their stewardship, the Bausch & Lomb brand will continue to stand for excellence and innovation in eye health," Brent Saunders, CEO of Bausch & Lomb, said in a statement.
After the deal closes Saunders and other senior Bausch & Lomb executives will join Valeant.
It's the second big pharmaceutical acquisition in a week. Last Monday, Actavis (NYSE:ACT) said it planned to buy Warner Chilcott (NASDAQ:WCRX) in a deal worth $8.5 billion.
Valeant, which has a market capitalization of $25.66 billion, soared 10 percent to C$95.52 on Monday and 24 percent in the past two days in Toronto following speculations over the deal.
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