What happened?

Valeant Pharmaceuticals (NYSE:BHC) is shedding one of its business units. The company has struck a deal to unload its iNova Pharmaceuticals business for $930 million. The buyer is a company jointly owned by affiliates of alternative asset manager Carlyle Group (NASDAQ:CG) and Australia-based private equity firm Pacific Equity Partners. The deal will be completed entirely in cash.

The sale is part of a broader Valeant effort to streamline its business and raise funds to retire debt. 

iNova concentrates on prescription and over-the-counter medications in a variety of categories. It has operations in 15 countries; according to Valeant, it has leading market positions in South Africa and Australia.

Pharmacy

IMAGE SOURCE: GETTY IMAGES.

Carlyle's press release on the deal quoted Pacific Equity Partners' managing director David Brown as saying, "We intend to build on iNova's diversified healthcare platform by investing in product development, geographical expansion, marketing, staff and potential acquisitions of additional brands."

The transaction is expected to close in the second half of this year. It is subject to approval from the relevant regulatory bodies. 

Does it matter?

Valeant grew large, and quickly, through a series of acquisitions. Not surprisingly, it managed to amass a huge pile of debt while doing so -- at the end of its most recently reported quarter, long-term indebtedness stood at a dizzying $28 billion-plus (dwarfing the latest annual revenue figure of $9.7 billion). Last year, the company pledged to retire $5 billion in borrowings; the iNova divestment is part of that strategy.

There are indications that the Carlyle/Pacific Equity Partners team got a decent deal on their purchase, as media reports originally had it that Valeant was seeking over $1 billion for iNova.

Regardless, it's encouraging to see Valeant put its money where its mouth is and continue its divestment efforts. This is a company in need of refocusing and retrenchment, and sales like this should boost investor confidence in this strategy.

Eric Volkman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Valeant Pharmaceuticals. The Motley Fool has a disclosure policy.