Canadian pharmaceutical company Valeant Pharmaceuticals International Inc on Monday announced a deal to acquire US eye health company Bausch & Lomb for US$8.7 billion in cash, becoming a behemoth in the burgeoning eye care sector.
The acquisition, which had been rumored, positions Valeant to capitalize on “growing eye health trends driven by an aging patient population, an increased rate of diabetes and demand from emerging markets,” a joint statement said.
The merger also gives Valeant access to Bausch & Lomb’s large portfolio of products and “a late stage pipeline of innovative, new products.”
“With this transaction, Valeant will be a worldwide leader in both dermatology and eye health,” Valeant CEO Michael Pearson said.
Founded in 1853, privately held Bausch & Lomb, based in Rochester, New York, is best known for its contact lenses and for products related to maintaining contact lenses, such as PureVision, Optima and ReNu.
The company also manufactures eye drops for treating eye dryness, glaucoma or allergies and materials used in eye surgery.
The purchase of Bausch & Lomb by Valeant follows a series of about 15 recent acquisitions by the Canadian company over the last year totaling US$3.5 billion.
However, Bausch & Lomb is a far bigger target, enabling the Canadian firm to double its revenues in one fell swoop.
The US company, which employs 11,200 worldwide, last year reported revenues of about US$3 billion, according to a filing with US securities regulators. Valeant reported revenues of US$3.3 billion and had about 7,000 employees at the end of last year.
Both companies had losses for last year, with Bausch & Lomb reporting a loss of US$68.3 million and Valeant a loss of US$116 million. The potential Bausch & Lomb deal comes on the heels of Valeant’s reportedly unsuccessful bid to buy US pharmaceutical company Actavis for more than US$13 billion.
The transaction also replaces a plan launched in March for Bausch & Lomb to undertake an initial public offering. Valeant said the transaction would be financed with debt and approximately US$1.5 billion to US$2 billion of new equity.
Bausch & Lomb will retain its name and become a division of Valeant, while Valeant’s existing ophthalmology businesses will be integrated into the Bausch & Lomb division.
The transaction, which is expected to close in the third quarter, is subject to closing conditions and regulatory approvals.