ALISO VIEJO, Calif. and TORONTO — Specialty pharmaceutical makers Valeant and Biovail have agreed to merge, with the combined company to be called Valeant Pharmaceuticals International Inc.
The companies said Monday that the combined company’s scale, financial strength and complementary product lines will enable it to pursue substantial growth opportunities, with a significantly expanded presence in North America and operations in eight other countries, working across four growth platforms.
In addition, the new Valeant will be able to leverage its complementary product lines and operations in specialty central nervous system, dermatology, Canada and emerging markets/branded generics, Valeant and Biovail stated. The combined company also will have limited patent exposure as well as strong cash flows from legacy products that will support future growth, they added.
Plans call for J. Michael Pearson, chairman and chief executive officer of Aliso Viejo, Calif.-based Valeant, to serve as the combined entity’s CEO, residing in Barbados, and Bill Wells, CEO of Mississauga, Ontario-based Biovail, to be the nonexecutive chairman.
The new Valeant’s board will consist of 11 members, including five Biovail representatives, five Valeant representatives and one additional independent Canadian resident director to be identified through a search process and nominated by Valeant and agreed upon by Biovail. Robert Ingram, currently lead director of Valeant, will serve as lead independent director of the new Valeant’s board.
"This compelling combination will create tremendous value for stockholders of both companies as our business benefits from cost savings, greater scale, efficiencies from extending Biovail’s corporate structure, and enhanced financial strength and flexibility," Pearson said in a statement. "We are committed to delivering the anticipated cost savings benefits and, as we did with Valeant over the past two years, transforming the new entity into a diversified, specialty pharmaceutical company focused on growth and cash flow generation."
Biovail chairman Douglas Squires stated, "The combination of Biovail and Valeant creates a new leader in specialty pharmaceuticals by combining two highly successful management teams in our industry. Our board is enthusiastic about the opportunities the combination will bring for shareholders and employees of both companies."
Added Biovail CEO Wells, "With strong cash flows, substantial synergy opportunities and minimal patent risk, the new Valeant presents the opportunity to create shareholder value at a level that would not have been possible for either company on a stand-alone basis. Moreover, the combined company will preserve the advantageous Biovail corporate structure."
Under the terms of the agreement, Valeant stockholders will receive a one-time special cash dividend of $16.77 per share immediately prior to closing of the merger and 1.78 shares of Biovail common stock upon closing of the merger in exchange for each share of Valeant common stock they own. The transaction is intended to qualify as a tax-free reorganization for Valeant stockholders. Upon the completion of the merger, which is expected to occur before the end of the year, Biovail stockholders will own approximately 50.5% and Valeant stockholders will own about 49.5% of the shares of the combined company on a fully diluted basis.
After the merger closes, the new Valeant will be based in Mississauga and be a Canadian domiciled corporation, listed on both the Toronto and New York Stock Exchanges. In addition, the combined company will retain Biovail’s existing principal operating subsidiary in Barbados, which will continue to own, manage, control and develop intellectual property for the combined company. The location of the merged company’s U.S. headquarters will be determined after the close of the transaction, Biovail and Valeant said.
Comments are closed.