Valeant Pharmaceuticals International, Inc.
) recently announced that it has entered into an agreement to
acquire certain branded generic assets from Mexican pharmaceutical
company, Atlantis Pharma. As per the terms of the agreement,
Valeant Pharma will pay approximately $71 million for the assets.
The deal is expected to close in second quarter, subject to
fulfillment of certain regulatory conditions.
The acquired assets generated net revenues of $26 million in
2011. In 2012, the revenues are expected to show double-digit
growth. We expect the deal to be accretive for Valeant Pharma.
We note that Valeant Pharma is on an acquisition spree to expand
its business. Just last week, Valeant Pharma purchased US-based,
privately owned specialty pharmaceutical company, Pedinol
In March 2012, Valeant Pharma inked a deal to purchase Russian
specialty pharmaceutical company Natur Produkt. During the same
month, Valeant Pharma signed a couple of more deals. The company
inked a deal to acquire certain branded generic assets from an
Austrian pharmaceutical company, Gerot Lannach. Furthermore,
Valeant Pharma bought a 19.9% stake in a Brazilian biotech company,
Pele Nova Biotecnologia S.A.
In February 2012, Valeant Pharma announced its intent to acquire
Eyetech, Inc., a private eye care company. The Eyetech offer came
on the heels of Valeant's failure to acquire another eye care
) in January 2012.
We remind investors that in 2012, Valeant Pharma had kicked off
its acquisition spree with Brazilian sports nutrition and food
supplements company Probiotica Laboratorios Ltd.
Though the source of funds for the Atlantis Pharma deal were not
disclosed, it is possible that the cash balance of $164 million at
the end of December 31, 2011, enabled the company to fund the
acquisition. In past the company has funded several acquisition
through its cash balance.
We currently have a Neutral long-term recommendation on Valeant
Pharma. The stock carries a Zacks #2 Rank (Buy rating) in the short
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