By Ben Fox Rubin
Valeant Pharmaceuticals International Inc. (VRX, VRX.T) agreed
to raise its offer for Obagi Medical Products Inc. (OMPI) by 22%,
besting Merz Pharma Group's recently disclosed bid for the
specialty pharmaceutical company.
Valeant now will pay $24 in cash for each Obagi share, boosting
its acquisition price to about $420 million from $345 million.
Obagi shares again rose sharply amid the acquisition activity,
jumping 8.8% premarket to $24.90 as investors seem to expect the
bidding war may not be over. As of Tuesday's close, the stock was
up 68% since the start of the year.
Valeant agreed to buy Obagi in late March, though Merz on
Tuesday publicly disclosed a $22-a-share cash offer, or $385
million, saying it wanted stockholders to have an opportunity to
benefit from its "superior proposal." Merz said it had been engaged
in discussions with Obagi on a potential combination and wasn't
made aware that Obagi was considering signing another deal.
Obagi later Tuesday responded by saying its board will evaluate
Merz's offer, noting "time is of the essence in this matter."
A Merz representative wasn't immediately available for comment
Wednesday morning.
Obagi, a specialty pharmaceutical company, develops proprietary
topical aesthetic and therapeutic prescription-strength skin-care
systems, which generated about $120 million in revenue last
year.
Valeant and Merz develop a range of pharmaceutical products in
dermatology and neurology.
Valeant's shares closed Tuesday at $75.37 and were inactive
premarket.
Write to Ben Fox Rubin at ben.rubin@dowjones.com
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