Valeant and Biovail to Merge

Arthi Gupta
21 Jun, 2010
New York City

Valeant and Biovail Corp. have unanimously approved a merger agreement under which the companies would combine to generate enhanced value for stockholders.

[R]12:15 PM New York – Valeant and Biovail Corp. have unanimously approved a merger agreement under which the companies would combine to generate enhanced value for stockholders.[/R]

Valeant Pharmaceuticals International and Biovail Corp. the two specialty pharmaceutical companies announced today that their boards have approved a merger deal under which the companies would combine to have an expanded presence in North America and eight other countries. The combined company will be named Valeant Pharmaceuticals International, Inc.

The merger is subject to approval by the shareholders of both Valeant and Biovail and the satisfaction of customary closing conditions and regulatory approvals, including anti-trust and competition law approvals in the US and certain other foreign jurisdictions.

As per the terms of the transaction, shareholders of Valeant will receive a one-time special cash dividend of $16.77 per share immediately prior to closing of the merger and 1.7809 shares of Biovail common stock upon closing of the merger in exchange for each share of Valeant common stock they own.

Upon completion of the merger, shareholders of Canada-based Biovail will own about 50.5% and Valeant stockholders will own nearly 49.5% of the shares of the new company on a fully diluted basis. For Biovail stakeholders, this merger represents a 15% premium based on a calculation of stock prices over the last 10 trading days.

The transaction, which is expected to close before the end of the year, is anticipated to be cash adjusted earnings per share accretive to the shareholders of both the companies within the first 12 months post-close.

In order to finance the merger, the drugmakers have secured a commitment of $2.8 billion through a term loan facility provided by Goldman Sachs Bank USA, Morgan Stanley & Co. Inc., and Jefferies & Company, Inc. As a part of the transaction, existing Valeant 7.625% and 8.375% senior unsecured notes will be refinanced.

Following the completion of the merger, the new Valeant will be headquartered in Mississauga, Ontario and will remain a Canadian domiciled corporation, listed on both the Toronto and New York Stock Exchanges.

Currently Valeant''s lead director, Robert Ingram will be appointed as lead independent director of the board of the combined company. Chairman of Biovail''s Audit Committee, Michael Every will be serving in the same function for the combined board.

Both Valeant and Biovail stated that the new Valeant will be able to leverage its complementary product lines and operations in specialty Central Nervous System, Dermatology, Canada and emerging markets/branded generics. Further, the combined company is anticipated to have limited patent exposure and enjoy strong and stable cash flows from legacy products.

In Friday''s regular trading session, Valeant Pharmaceuticals International ((VRX)) closed trading at $45.87 per share on the New York Stock Exchange. In the past 52-week period, the stock traded in a range of $22.17 to $50.40.

Biovail Corp. ((BVF)) closed Friday''s regular trading session at $14.60 per share on the NYSE. In the past 52-week period, the stock traded in a range of $12.14 to $17.28.