Valeant to purchase Bausch + Lomb for US$8.7bn

Will establish Valeant as a global leader in eye health and dermatology

Michael Pearson said the acquisition would transform Valeant into a global leader in eye health

Valeant Pharmaceuticals has agreed to buy Bausch + Lomb, a global eye health company, for US$8.7bn in cash, making the firm a global leader in both dermatology and eye health.

Bausch + Lomb operates in three segments: pharmaceutical (including prescription brands, generics and over-the-counter (OTC)); vision care (contact lenses and solutions); and surgical (intraocular lenses and surgical equipment).

The US firm, based in Rochester, NJ, which has a broad portfolio of eye health products, will keep the Bausch + Lomb name and become a division of Valeant.

Canadian company Valeant‘s existing ophthalmology businesses will be integrated into the Bausch + Lomb division, creating a global eye health platform with estimated revenue of more than $3.5bn.

Valeant said the acquisition would allow the company to capitalise on growing eye health trends driven by an ageing patient population, an increased rate of diabetes and demand from emerging markets. The combined business will also benefit from access to a strong product portfolio and a late-stage pipeline of innovative, new products, the firm said.

We are strongly committed to continuing to build a sustainable eye health business

Under terms of the agreement, which has been approved by the board of directors of both companies, Valeant will pay $8.7bn, of which approximately $4.5bn will go to an investor group led by Warburg Pincus and approximately $4.2bn will be used to repay Bausch + Lomb’s outstanding debt. Valeant expects to achieve at least $800m in annual cost savings by the end of 2014. Bausch + Lomb expects to have revenues of approximately $3.3bn and adjusted EBITDA in 2013 of approximately $720m.

Valeant‘s Chairman and Chief Executive Michael Pearson said the acquisition would transform Valeant into a global leader in eye health by ‘significantly strengthening its capabilities in ophthalmic pharmaceuticals, contact lenses and lens care products, and ophthalmic surgical devices and instruments’.

‘Bausch + Lomb‘s world-renowned brand, comprehensive portfolio of leading eye care products, and promising late stage pipeline are an ideal strategic fit for our current ophthalmology business and we are strongly committed to continuing to build a sustainable eye health business,’ he said.

Bausch + Lomb‘s Chief Executive Brent Saunders added: ‘Bausch + Lomb has undergone a profound transformation over the last few years. We introduced innovative new products for patients; built a robust pipeline; expanded into new markets; and strengthened our relationships with eye care professionals around the world.

‘Valeant‘s acquisition of our company is a testament to the tremendous value our talented employees have created over the past several years.’

Following the completion of the deal, Saunders will join Valeant in an advisory role and Fred Hassan, Chairman of Bausch + Lomb‘s Board of Directors, will join Valeant‘s Board.

In addition, Dan Wechsler, Executive Vice President and President of Bausch + Lomb‘s Global Pharmaceuticals, will join Valeant as Executive Vice President and Company Group Chairman, Ophthalmology and Eye Health. Chief Medical Officer Calvin Roberts, will also join Valeant as Chief Medical Officer, Ophthalmology and Eye Health. Additional members of Bausch + Lomb’s senior management team will also join Valeant.

The transaction is expected to close in the third quarter.

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