Please ensure Javascript is enabled for purposes of website accessibility

Merz Pharma Outbids Valeant for Obagi

By Rich Smith - Apr 2, 2013 at 4:55PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Obagi's board is looking the offer over.

Oops. Did we say that "Montreal-based Valeant Pharmaceuticals (BHC 0.10%) is buying Long Beach, Calif.-based specialty pharma company Obagi Medical Products (NASDAQ: OMPI) for about $344 million" -- a price of only 2.9 times sales, versus Valeant's own 6.2 P/S ratio?

What we meant to say was that Valeant was hoping it could get the shares at such a nice discount. Turns out, though, that someone else is willing to bid quite a bit more for Obagi. That someone emerged this morning, when Germany's Merz Pharmaceuticals sent Obagi's board a letter offering to buy the same stock for 11% more -- $22 a share.

Merz calls its offer a "superior proposal" to the one Valeant tendered last month. Merz says it's also ready to buy right away, needs to perform no additional due diligence, and has the cash in hand to make the buy "immediately" -- all of which has to make this a very tempting offer for Obagi.

For its part Obagi's board confirmed this morning that it's received Merz's offer and will "evaluate" it with the understanding that "time is of the essence." Expect a reply soon.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bausch Health Companies Inc. Stock Quote
Bausch Health Companies Inc.
BHC
$9.87 (0.10%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.