MISSISSAUGA, Ontario—Apparently not wanting to simply getthrough corporate life by the skin of its teeth, Valeant PharmaceuticalsInternational Inc. instead seems eager to sink its teeth into any companyhaving to do with skin—at least if the current rumors are true that the Canadiancompany, which has been going on an acquisition spree for some time now, hasits eyes on Swedish company Meda AB and Scottsdale, Ariz.-based MedicisPharmaceutical Corp.
Meda was the first company to enter the rumor mill in termsof potential acquisition, following news in July of twoacquisitions meant to add to Valeant's growing dermatology portfolio:first, the purchase of Dermik, a dermatology unit of Sanofi, for $425 million,followed by the addition of the Ortho Dermatologics division of JanssenPharmaceuticals Inc. for $345 million.
The word from unnamed sources inside Meda is that Valeantapproached Meda a few weeks ago with an offer to acquire the company forsomewhere in the $3.4 billion to $4.4 billion range. The sources did note tothe media that the offer was informal and that it was possible nothing wouldcome of it.
Meda's board of directors issued a terse response to theprimary news story about a potential acquisition by Valeant—which was publishedby the Wall Street Journal—in the form of a news release, which notedprimarily that the board "has not received an approach of the kind that isdescribed in the article. However, there are several collaborations betweenMeda and Valeant including joint ventures in Canada, Mexico and Australia."
It is worth noting, though, that the board didn't say Medawasn't approached at all—only that it wasn't approached in the way the articlenoted. It may be that Valeant made no overture at all, not even hints, but thewording by Meda's board could suggest something was said, if only informally,about buying the company.
Meda reportedly has explored theoption of selling the company in the past, including to private-equity andtrade buyers, according to a person familiar with the matter whom the WallStreet Journal interviewed, suggesting that Meda might be open to afriendly deal if the price tag were large enough.
Meda is based in Solna, which isoutside of Stockholm, and in addition to dermatology drugs also makesrespiratory, cardiology and pain and inflammation drugs. It is said to have abusiness that much resembles Valeant's own, which might not be surprising giventhat back in 2008, it agreed to paying $392 million in cash for Valeant'soperations in Western Europe and Eastern Europe, including Russia.
Meda and Valeant recently struck acollaboration agreement whereby Meda licensed two of its dermatology productsto Valeant in the United States, Canada and Mexico. In addition to those drugs,Meda sells Bifera, a drug to treat iron deficiency; Cesamet, a treatment fornausea from chemotherapy; Muse, a drug for erectile dysfunction; and Edluar,which helps induce sleep.
Valeant develops and distributesdrugs to treat epilepsy and other central nervous system disorders, but hasbeen actively growing its dermatology presence through acquisitions, and hasstated a goal of being the leading global pharma company in the dermatologymarket in next five years, give or take.
Another step toward that lofty goalcould be the acquisition of Medicis. News of that potential deal, which neitherValeant nor Medicis will confirm is being discussed, hit the news wires on Aug.9, with many media sources noting the interesting timing of the rumoreddiscussions. There is currently an investigation into the unusual death ofRebecca Nalepa, the girlfriend of Medicis's founder and chief executive, JonahShacknai, in July at Shacknai's home. Although the San Diego County Sheriff'sOffice has said Shacknai wasn't home when the body was found, and there are nosuspects or persons of interest yet named in the case, Medicis shares have beenunderperforming the broader market since then, leaving the company vulnerableto a takeover approach, according to people "familiar with the matter" whospoke to the Wall Street Journal.
Medicis makes dermatological andaesthetic pharmaceutical products, has a market capitalization of about $2.1billion and descibes itself as "the leading independent specialtypharmaceutical company in the United States focusing primarily on the treatmentof dermatological and aesthetic conditions," adding that the company is"dedicated to helping patients attain a healthy and youthful appearance andself-image."
Interestingly, Medicis President Mark Prygocki was asked in June ifhe thought the company would consider acquisition offers, to which he answered,perhaps ironically if the acquisition rumors are true: "We see ourselves as anacquirer, acquirer of technology, a consolidator amongst existing assets thatare out in the dermatology market that are for sale, as we speak. So, we seeourselves as being a buyer."