Valeant Pharmaceuticals to acquire Obagi Medical Products for $344 mn

Canada's specialty pharmaceutical company Valeant Pharmaceuticals International Inc yesterday agreed to buy Obagi Medical Products Inc for about $344 million, in order to boost its dermatology and plastic-surgery business.

Ontario-based Valeant, the largest publicly traded drug maker in Canada, will pay $19.75 a share, a 28-per cent premium to Obagi's Tuesday's closing.

The Obagi board has approved the transaction and has recommended that its shareholders tender their shares to the deal, which is expected to close in the first half of 2013.

Valeant said that the deal is expected to save at least $40 million in annual costs within six months of closing and expects the transaction to immediately add to its cash earnings per share.

Founded in 1988, California–based Obagi is a specialty pharmaceutical company that develops proprietary topical aesthetic and therapeutic prescription-strength skin care systems.

Using its 'penetrating therapeutics; technologies, Obagi's products are designed to improve penetration of agents across the skin barrier for common and visible skin conditions in adult skin, including premature aging, photodamage, hyperpigmentation, acne, sun damage, rosacea, and soft tissue deficits, such as fine lines and wrinkles.

Obagi had 2012 revenues of about $120 million.

Valeant has recently been acquiring several small dermatology and aesthetics companies in the US, including Medicis Pharmaceuticals Corp, which it acquired in September 2012 for $2.6 billion. (See: Canada's Valeant to acquire Medicis Pharmaceutical for $2.6 bn)

With a market cap of $22.4 billion and annual revenues of $3.5 billion, Valeant has a product portfolio of about 490 products, and has two drugs in the top 200 drugs by sales in the US. Its main markets are in the US, Canada, Mexico, Brazil, Europe and Australia.

Valeant has made over 60 acquisitions since 2008, including some recent ones like Sanofi's skincare unit Dermik, Ortho Dermatologics, a unit of Johnson & Johnson, Lithuania-based specialty pharmaceuticals company AB Sanitas, Russian peer Natur Produkt International, some assets of Austrian pharmaceutical company Gerot Lannach Eyetech, a stake in Brazil's Probiotica Laboratorios, certain branded generic assets from Mexican pharmaceutical company Atlantis Pharma and US-based Pedinol Pharmacal, and OraPharma.