Valeant to buy contact lens maker Unilens for $28M

Tiny, OTC-traded Unilens Vision ($UVIC) will be snapped up by acquisition-hungry Valeant Pharmaceticals ($VRX) for $28 million. The $12.75 deal share price is a huge uptick for the company, which started out the year with its shares hovering at about $7 per share.

For Valeant, the move will complement the massive $8.7 billion acquisition of contact lens specialist Bausch + Lomb that it completed in August 2013. It will also enable Valeant to stop paying royalties to Unilens under a deal with Bausch + Lomb on one of its fastest growing ophthalmic products.

Unilens sells contact lenses, including its C-Vue brand, which includes a trio of lenses: multifocals for presbyopia, customized torics for astigmatism and astigmatic presbyopes and for near or far-sightedness. Valeant acquired Unilens for an enterprise value of $28 million, which takes into account $5 million in debt. The deal is expected to close by Sept. 1.

Valeant, with its expansive ophthalmic presence, obviously expects to drive more significant sales volume than Unilens has achieved on its own. Last quarter, it had only $1.6 million in product sales, an increase of about 5% from the same quarter a year earlier that was driven by C-Vue products.

"We are very pleased to sign a definitive agreement with Valeant, which creates immediate value for our stockholders," said Unilens chairman, President and CEO Michael Pecora in a statement. "The combination of Unilens' world class technology and its leading customized lens business with Valeant will create a strong portfolio of products enhancing our commitment to providing the best possible visual outcomes throughout the optical industry."

Contact lenses are a solid growth business already for Valeant. Last quarter, it reported 19% year over year growth in the segment that was driven primarily by its Biotrue ONEday lens from Bausch + Lomb, for which Unilens collects royalties.

In the most recent 9-month period, Unilens collected $1.9 million in royalties. Once the acquisition is complete, Unilens royalties are an expense that Valeant will no longer have. And those royalties may have increased: Valeant is expecting Biotrue ONEday will continue ramping up revenues.

"Biotrue ONEday delivered its biggest revenue quarter since launched, growing 97% over the prior year," said Valeant chairman and CEO Michael Person on an April earnings call. "We expect this growth to continue as we recently received clearance for our Biotrue Toric lens and planning on launching this product later this year."

- here is the release