Biovail, Valeant Pharma strike merger deal

Canada's Biovail has struck a deal to merge with Valeant Pharma, with the combined company keeping the Valeant name and the Biovail home town of Mississauga, Ontario. Goldman Sachs and Jefferies are stepping in with $2.8 billion to finance the deal. Valeant, which saw its share price slip on the news, is valued at $3.5 billion while Bloomberg placed Biovail's valuation at $2.3 billion.

The merger into Valeant Pharmaceuticals International combines Valeant's fast-growing dermatology pipeline with Biovail's CNS therapies. Valeant, which now has seven therapies in development, has been on a long buying splurge, snapping up a string of companies like Aton Pharma and Vital Science while also forging new commercialization pacts. Both companies have been through wrenching changes in the past decade, with Biovail's founder Eugene Melnyk and Valeant founder Milan Panic both departing after a sharp, losing fight for control of the company.

Once the deal is done by the end of this year, Biovail shareholders will hold on to 50.5 percent of the company with Valeant shareholders getting the remaining 49.5 percent.

J. Michael Pearson, the CEO of Valeant, boasted that the deal provides "tremendous value for stockholders of both companies as our business benefits from cost savings, greater scale, efficiencies from extending Biovail's corporate structure, and enhanced financial strength and flexibility. We are committed to delivering the anticipated cost savings benefits and, as we did with Valeant over the past two years, transforming the new entity into a diversified, specialty pharmaceutical company focused on growth and cash flow generation." Pearson will be CEO of the combined company with Biovail CEO Bill Wells taking over as non-executive chairman of the board.

- read the release for more
- here's the story from Bloomberg