Valeant Buying Obagi for $344 Million

Montreal-based Valeant Pharmaceuticals (NYSE: VRX  ) is buying California-based specialty pharma company Obagi Medical Products (UNKNOWN: OMPI.DL  ) for about $344 million, the companies announced today.

Valeant, which specializes in products designed for dermatology, neurology, and branded generics, has signed a definitive agreement to purchase all outstanding Obagi shares for $19.75 each, a 28% premium over the shares' closing price yesterday. The deal is expected to close before the end of Q2 2013. Regulatory approval is required. Valeant expects the deal to be immediately accretive to its cash earnings per share.

Obagi manufactures aesthetic and therapeutic skin-health systems under brand names such as Obagi Nu-Derm, Condition & Enhance, Obagi-C Rx, ELASTIDerm and CLENZIDerm, thus slotting nicely into Valeant's product portfolio. Obagi recorded $120 million in revenues last year, making for about a 2.9-times-sales valuation on Valeant's buyout.

Valeant's own shares sell for 6.2 times sales, however, suggesting the company is buying Obagi for a nice discount to its real value -- and as an added bonus, Obagi is already profitable, whereas Valeant is not.

Even as investors bid up shares of Obagi 28% in response to today's news (as of this writing), Valeant shares got a lift as well, rising 2.9% to trade at $73.51.

link


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2323357, ~/Articles/ArticleHandler.aspx, 8/20/2014 8:54:10 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement