Valeant Pharma Offer Tops Paladin's - Analyst Blog
29 Settembre 2011 - 4:45PM
Zacks
Canadian drug maker Valeant Pharmaceuticals
International, Inc. (VRX) recently announced that it has
raised its purchase offer for another Canadian company Afexa Life
Sciences Inc. which it offered to buy in August 2011. Valeant
Pharma has offered to pay $0.85 for each common share of Afexa, 20%
more than the originally offered price of $0.71. The takeover price
also outdoes Paladin Labs’ $0.81 per share bid for Afexa. The
increased offer is however subject to certain amendments to support
agreement.
Afexa markets several consumer brands, the most important of
which are Cold-FX and Coldsore FX. Cold-FX is a leading OTC cold
and flu medicine which will synergize well with Valeant’s products,
dermaglow and CeraVe, in the Canadian OTC franchise.
Of late, Valeant Pharma has been on a buying spree. In
mid-August 2011, Valeant Pharma completed the acquisition of
Lithuania-based specialty pharmaceuticals company Kaunas, which is
expected to boost Valeant Pharma’s European branded generic
portfolio.
In July 2011, Valeant Pharma announced acquisitions that would
entrench its already strong presence in the dermatology market in
the US. Valeant Pharma intends to acquire the assets of Ortho
Dermatologics, a dermatology unit of pharma giant Johnson
& Johnson (JNJ), for $345 million in cash. Valeant
Pharma also announced that it intends to acquire Dermik, a
dermatology unit of Sanofi Aventis (SNY), in the
US and Canada. Valeant Pharma intends to close both the Dermik and
Ortho Dermatologics acquisitions by the end of the year.
Further, in March 2011, Valeant acquired privately owned, Swiss
branded generics and OTC pharmaceutical company PharmaSwiss S.A.
for 350 million euros. This deal was also directed towards
expanding Valeant’s European branded generics business.
Our Recommendation
We have a Neutral recommendation on Valeant Pharmaceuticals. The
stock carries a Zacks #3 Rank (Hold rating) in the short run.
Valeant in its current form emerged from the merger of Biovail
and Valeant in September 2010. Overall, we believe the
combined Biovail/Valeant entity is a unique company as it offers
global reach, a diversified revenue base, a favorable tax structure
and limited patent exposure. Moreover, accretive acquisitions add
to the company’s investment thesis. Despite the string of recent
purchases, the company is however not being able to clinch the big
deals. The inability to acquire Cephalon (CEPH)
was a disappointment. We presently prefer to remain on the
sidelines.
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