Valeant nabs iNova for approximately $689 million

After a few relatively quiet months following its acquisition spree late this summer, Valeant Pharmaceuticals International, Inc. has lined up yet another acquisition, announcing that it will be acquiring Australian pharmaceutical company iNova Pharmaceuticals in a deal that could potentially be worth A$700 million (approximately US $689 million).

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MISSISSAUGA, Ontario— After a few relatively quiet monthsfollowing its acquisition spree late this summer, Valeant PharmaceuticalsInternational, Inc. has lined up yet another acquisition, announcing that itwill be acquiring Australian pharmaceutical company iNova Pharmaceuticals in adeal that could potentially be worth A$700 million (approximately US $689million). Under the terms of the transaction, Valeant will pay A$625 million(approximately U.S. $615.2 million) to iNova shareholders upfront, with thepossibility of up to an additional A$75 million (approximately U.S. $73.8million) in potential milestones, depending on the success of pipelineactivities, product registrations and overall revenue. Valeant will acquireiNova from Archer Capital and Ironbridge Capital, which acquired iNova from 3M inDecember 2006, and other minority management shareholders.
"iNova has developed into a serious regional pharmaceuticalsplayer," Ben Frewin, investment director for Archer Capital, said in a pressrelease. "The iNova and Valeant businesses are highly complementary and we arepleased to see iNova enter its next phase of growth with Valeant. iNova hasbeen another strong investment for our Funds."
iNova, which has offices in Australia, Southeast Asia andSouth Africa, sells and distributes prescription and over-the-counter productsin a variety of therapeutics areas. The company's product portfolio consists ofin-licensed and in-house developed drugs in allergy, pain management, sexualhealth, cardiology, weight management, respiratory health and dermatology. Someof its products include Duromine, one of iNova's leading weight managementbrands, and Difflam and Duro Tuss, some of its over-the-counter brands in the coldand cough areas.
Total revenues for iNova in 2011 are expected to beapproximately A$200 million (approximately U.S. $196.8 million), with anoperating margin of about 40 percent. The company's revenues have grownapproximately 10 percent per annum over the span of the last four years.Valeant expects the acquisition to be immediately accretive.
The acquisition of iNova is the latest of several made byValeant in the second half of 2011 as the company strives to expand andstrengthen, and features the largest price tag by a difference of about $200million. After its unsuccessful $5.7 billion takeover bid of Cephalon in April,Valeant was content to spend the money elsewhere, with Pearson noting in apress release that Valeant would "remain disciplined on our M&A strategy"and "look to deploy our freed-up capital on other opportunities to create valuefor our shareholders." And the company certainly held true to that plan, goingon to acquire AB Sanitas in May for approximately $446 million, followed by thepurchase of Dermik, Sanofi's dermatology unit, in July for $425 million.Valeant also acquired Janssen Pharmaceuticals Inc.'s Ortho Dermatologicsdivision the same month for $345 million.
"This transaction not only transforms our operations inthe Australian market, but provides us with a beachhead in both Southeast Asiaand South Africa," J. Michael Pearson, chairman and chief executiveofficer of Valeant, said in a press release. "iNova has a talentedmanagement team that has created a strong business operation ahead of anintended initial public offering and with the current market softness, Valeanthas a unique opportunity to acquire iNova and integrate our Australianoperations into the broader iNova Asia Pacific business."
The transaction is expected to be complete in December 2011,and is subject to certain closing conditions, regulatory approvals andpost-closing adjustments.

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