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Merz Pharma Outbids Valeant for Obagi

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

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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.

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