In a move to restructure its portfolio, Valeant Pharmaceuticals International, Inc. (VRX) announced that it has entered into an agreement with Nestle S.A to sell its rights of some of its key products.
As per the agreement, Valeant Pharmaceuticals will sell its rights to Restylane, Perlane, Emervel, Sculptra, and Dysport for $1.4 billion in cash.
We note that Valeant acquired rights to aesthetics products such as Dysport, Perlane, and Restylan through its acquisition of Medicis in Dec 2012.
Nestle is on the verge of completing its acquisition of Galderma S.A. in Jul 2014. Nestle expects to operate the acquired products through Galderma.
Meanwhile, Valeant is engaged in a patent infringement suit with Allergan, Inc. (AGN) for Restylane and Perlane dermal filler products. The latter has accused the former of infringing some of its patents in the U.S.
Valeant’s decision to sell some of its key products comes in the light of its proposed acquisition of Allergan.
In Apr 2014, Valeant and Pershing Square Capital Management, L.P proposed to acquire Allergan. Valeant proposed that each Allergan share would be exchanged for $48.30 in cash and 0.83 shares of Valeant common stock. Pershing Square Capital Management is the largest shareholder at Allergan with a 9.7% stake.
However, Allergan has made it clear that it is reluctant to accept Valeant's offer. Allergan recently indicated that it is skeptical of Valeant's business model and its ability to provide increased value to the shareholders.
On the other hand, Valeant is expected to increase its acquisition offer price. We expect investor focus to remain on updates from the proposed acquisition.
Allergan currently carries a Zacks Rank #1 (Strong Buy) while Valeant is a Rank #3 (Hold) stock.
Right now, stocks like Gilead Sciences (GILD) and Alexion Pharmaceuticals (ALXN) look attractive. While Gilead Sciences carry a Zacks Rank #1, Alexion Pharma is a Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment