Valeant to Sell Skin-Care Brands to L'Oreal -- 2nd Update
January 10 2017 - 2:31PM
Dow Jones News
By Dana Mattioli, David Benoit and Jonathan D. Rockoff
Valeant Pharmaceuticals International Inc. reached deals to sell
$2.1 billion in assets, the struggling drug company's biggest moves
yet to refocus around its consumer offerings and pare its heavy
debt load.
The Canadian company agreed to sell three skin-care brands,
including its CeraVe line, to French cosmetics giant L'Oréal SA for
$1.3 billion. It also said it would sell its Dendreon cancer
business to Chinese conglomerate Sanpower for $820 million.
The asset sales are part of Valeant Chief Executive Joseph
Papa's efforts to sharpen the company's focus on its key franchises
in skin drugs, stomach treatments, eye care and consumer health
while selling noncore assets to pay down its roughly $30 billion in
debt.
Later Tuesday, Mr. Papa will speak at the J.P. Morgan Healthcare
Conference in San Francisco, where analysts and investors are
anticipating updates on his vision for Valeant. The former Perrigo
Co. CEO joined Valeant in May to help restore battered investor
confidence.
Valeant's stock has collapsed since late 2015, when an
accounting issue raised questions about its earnings and spurred a
crisis of confidence in management. The company's backers have
consistently argued the stock market has ignored the value of the
underlying businesses, while its detractors have focused on the
company's debt and slumping earnings.
The stock rose around 5.1% to $16.13 early Tuesday afternoon,
but it is still down 82% over the past 12 months and is well below
the all-time highs above $260 set in August 2015.
Valeant's deal announcements eased concerns that the company
would have to sell assets at fire-sale prices. It purchased CeraVe
in 2008 for $95 million and bought Dendreon out of bankruptcy in
2015 for about $500 million.
"Some good news finally," Evercore analyst Umer Raffat headlined
his note on the sales, saying the reduced revenue would mostly be
offset by the lower debt payments.
In a Tuesday note, Wells Fargo & Co. analyst David Maris
noted that the proceeds from the sales wouldn't fully cover the
$3.8 billion in debt Valeant has coming due by the end of 2018.
Valeant has put a number of assets on the auction block but has
struggled to strike deals at acceptable prices. It came close but
ultimately failed to seal a deal to sell stomach-drug maker Salix
Pharmaceuticals Ltd. to Japan's Takeda Pharmaceutical Co. for $10
billion. It is also exploring a sale of its Bausch & Lomb
surgical equipment business, which could fetch $2.5 billion, people
familiar with the matter have said.
Dendreon is known for prostate-cancer treatment Provenge. The
acquisition was Valeant's first big transaction after losing a
hostile bid in 2014 for Botox maker Allergan, which went instead to
Actavis PLC for about $67 billion.
Valeant wasn't a big player in cancer treatments, and Provenge
proved a disappointing fit. Provenge had $300 million in sales the
year before the acquisition; it isn't clear what revenue has been
more recently.
The CeraVe brand includes cleansers, moisturizers and healing
ointments. The other brands -- AcneFree and Ambi -- encompass a
range of acne treatments. L'Oréal, one of the world's leading
cosmetics suppliers, said the three have combined revenue of around
$168 million a year.
For L'Oréal, the deal will expand its U.S. presence and add to
its offerings that cross between skin treatments and beauty
products. Skin care is now the beauty industry's largest category,
accounting for a quarter of the market, but growth has begun to
cool in recent years.
--Nick Kostov contributed to this article.
Write to Dana Mattioli at dana.mattioli@wsj.com, David Benoit at
david.benoit@wsj.com and Jonathan D. Rockoff at
Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
January 10, 2017 14:16 ET (19:16 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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