ALISO VIEJO, Calif.—As part of an ongoing refocusing of the operations of the company, Valeant Pharmaceuticals International announced two separate deals last week with Solna, Sweden-based Meda AB. Under the first deal, Valeant agreed to sell its Western Europe and Eastern Europe operations to Meda for $392 million in cash, then three days later announced joint ventures with Meda in Canada, Mexico and Australia focused on commercializing Meda products in those markets.
"This acquisition has a perfect fit with our operations in Europe," says Anders Lonner, CEO of Meda, in a statement announcing the acquisitions. "It also gives a very important contribution to our strategy to become stronger in Eastern Europe. We now get a foothold in Russia and we will use that platform to introduce many of our pipeline products."
The deal comes as Valeant is in the process of refocusing its business closer to home.
"Our focus is the North American market and we believe that this transaction will enable Valeant to better focus on its key strategic markets and products," says J. Michael Pearson, chairman and CEO of Valeant.
The assets purchased by Meda exclude a number of central European countries including Poland, the Czech Republic, Hungary and Slovakia. While this may seem counter to Valeant's efforts for focus more on the markets closer to home, it retained these regions with good reason. According to the company's second quarter earnings release on Monday, second quarter sales in Central Europe rose 32 percent to $41.1 million, compared to the same quarter last year.
Analysts received the news of Valeant's divestiture with positive comments, and the market, despite Valeant reporting a second quarter loss, has sent the stock higher—a clear indication Wall St. thinks the company is making the right moves.
"Valeant has been a company with too many products operating in too many countries. Narrowing its focus to core geographies, especially North America, is a sound strategic move, in our view," says Wachovia analyst Michael Tong in a recent note to investors.
In a separate deal announced three days later, the two companies announced three joint ventures aimed at marketing Meda products in Canada, Mexico and Australia. The joint ventures will initially include products such as Sublinox for the treatment of insomnia and pain treatment flupertine. There are also options to include additional products in the future.
Meda will be the majority owner of the joint ventures, which will seek to gain regulatory approvals for Meda products in each market, as well as manage the commercialization of approved products.