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Valeant nabs Medicis for $2.6 billion
09-05-2012
by Kelsey Kaustinen  |  Email the author
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MONTREAL—Valeant Pharmaceutical International, Inc. and Medicis Pharmaceutical Corporation have announced this week the establishment of a definitive agreement by which Valeant will acquire all outstanding shares of Medicis' common stock for $44 per share, for a total cash value of approximately $2.6 billion. The offer price represents a 39 percent premium over Medicis' closing share price on August 31, the last trading day before the transaction was announced, and a 31 percent premium over the company's three-month average trading price. The transaction has been unanimously approved by both companies' boards of directors, and is expected to close in the first half of next year.  
 
"Our Board of Directors believes this compelling all-cash transaction demonstrates the value our employees have created and the strength of our brand in the specialty pharmaceutical market," said Jonah Shacknai, chairman and CEO of Medicis, in a press release about the deal. "We look forward to combining our portfolio of products with Valeant, and we are confident that the combined portfolio under the Medicis name will be well positioned to capitalize on meaningful opportunities in the growing dermatology and aesthetics markets."
 
Medicis was founded in 1988, with its corporate headquarters in Scottsdale, Ariz. The pharmaceutical company specializes mainly on products for the treatment of dermatological and aesthetic conditions. The company's product portfolio includes brands such as Solodyn, Restylane, Ziana, Dysport, Perlane and Zyclara. The company has shown continued growth over recent years, posting revenues of approximately $571.9 million for full-year 2009, approximately $700 million for full-year 2010 and then approximately $721 million for 2011. Medicis posted a gross profit margin of roughly 90.7 percent for 2011, with a non-GAAP cash flow from continuing operations of roughly $218 million. In a recent press release of the company's second quarter 2012 financial results, Medicis reported revenues of roughly $197 million, placing above its guidance of $185 million to $195 million. It is expected that the combined company will see pro forma net revenue for 2012, for the combined dermatology and aesthetics businesses, of more than $1.7 billion in the United States.
 
"The acquisition of Medicis represents a significant next step in our journey to become the leader in dermatology by strengthening Valeant's presence in acne, actinic keratosis, aesthetic injectables and antivirals, among others," J. Michael Pearson, CEO and chairman of Valeant, said in a press release. "Medicis' highly complementary portfolio of leading branded products and promising pipeline is a solid strategic fit, and we look forward to leveraging Medicis' well known and respected name in dermatology to drive long- term growth."  
 
Once the transaction is complete, Valeant expects it to be immediately accretive to cash earnings per share, with forecasted cost synergies of at least $225 million annually within six months of the close of the deal. The combined company's commercial dermatology operations will be based in Scottsdale, Ariz., under the name Medicis, a division of Valeant. Dermatology research and development operations will be based in Laval, QC; Scottsdale, Ariz.; and Petaluma, Calif., with corporate support functions primarily located in New Jersey.  
 
Valeant brought on J.P. Morgan Securities LLC as its exclusive financial advisor, and Sullivan & Cromwell LLP and Skadden, Arps, Meagher & Flom LLP as its legal counsel. Medicis brought on Deutsche Bank Securities Inc. and Roberts Mitani, LLC as financial advisors, and Weil, Gotshal & Manges LLP and Latham & Watkins LLP as legal counsel.
 
Code: E09041201

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