Valeant Pharmaceuticals International, Inc.
) recently announced that it has entered into an agreement with
Medicis Pharmaceutical Corporation
) to acquire the latter for $44.00 per share in cash. The deal
value is estimated to be approximately $2.6 billion.
We note that the transaction was approved by the Boards of
Directors of both Valeant and Medicis and is expected to be
completed in the first half of 2013.
MEDICIS PHARM-A (MRX): Free Stock Analysis
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The Medicis acquisition price represents a 39% premium over the
closing price of last trading day (August 31, 2012) before the
announcement. The news was viewed positively by the investors. The
share price of both Valeant and Medicis soared after the
Medicis Pharmaceutical, a specialty pharmaceutical company, is
engaged in the development and marketing of products for the
treatment of dermatological and aesthetic conditions in the US. Key
products include Solodyn, Perlane, Restylane, Ziana, Dysport and
We have a positive take on Valeant's acquisition of Medicis. We
believe that Medicis' products will complement Valeant's portfolio.
The combined US revenues of both companies' dermatology and
aesthetics portfolio are expected to cross $1.7 billion.
Post acquisition, we believe that Valeant will be in a position to
leverage Medicis' strong presence in the dermatology market to
drive growth in the long run. The acquisition is expected to
generate synergies of at least $225 million with 6 months of
closing the deal. We expect the deal to be accretive for Valeant.
We note that Valeant has been on an acquisition spree to expand its
business. In June 2012, the company acquired a US-based specialty
oral health company, OraPharma. The company also acquired certain
assets from both University Medical Pharmaceuticals and Swiss
Herbal Remedies Limited in May 2012.
In April 2012, Valeant had purchased US-based, privately-owned
specialty pharmaceutical company, Pedinol Pharmacal, Inc. and
certain branded generic assets from Mexican pharmaceutical company,
In March 2012, Valeant inked a deal to purchase Russian specialty
pharmaceutical company Natur Produkt. During the same month,
Valeant signed a couple more deals. The company inked a deal to
acquire certain branded generic assets from an Austrian
pharmaceutical company, Gerot Lannach. Furthermore, Valeant bought
a 19.9% stake in a Brazilian biotech company, Pele Nova
We remind investors that in 2012, Valeant had kicked off its
acquisition spree with Brazilian sports nutrition and food
supplements company Probiotica Laboratorios Ltd.
We currently have a Neutral long-term recommendation on both
Valeant and Medicis. While Valeant carries a Zacks #4 Rank (Sell
rating) in the short run, Medicis carries a Zacks #3 Rank (Hold
rating) in the short run.