Valeant: The Sole Suitor for Obagi - Analyst Blog
April 09 2013 - 10:43AM
Zacks
Valeant Pharmaceuticals’ (VRX) proposed
acquisition of Obagi Medical Products, Inc. (OMPI)
received a boost with Merz Pharma Group opting out of the race to
purchase Obagi. Merz’s decision ended the bidding war between
Valeant and itself.
Merz Pharma’s decision came in wake of an increased acquisition
offer from Valeant Pharmaceuticals. We note that on Apr 2,
2013, Merz Pharma offered to acquire Obagi for $22 per share in
cash after Valeant proposed to acquire Obagi for $19.75 per share
on Mar 19, 2013. Subsequently, Valeant upped its offer price to
$24.00.
The increased offer price represented a 56% premium to Obagi's
closing share price on Mar 19, 2013 compared to 28% premium offered
earlier. The amended agreement was unanimously approved by Obagi’s
board.
We note that Obagi develops markets and sells products, which
prevent or improve the most common and visible skin disorders.
With leading dermatology brands such as Obagi Nu-Derm, Condition
& Enhance, Obagi-C Rx, ELASTIDerm and CLENZIDerm in its
portfolio, Obagi has grown its revenues from $35.6 million in 2001
to $120.7 million in 2012.
Valeant also has a strong presence in the dermatology field. We
believe that Valeant’s acquisition of Obagi, on materializing,
would further strengthen Valeant’s dermatology portfolio and pave
way for new growth opportunities.
We note that acquisition activity has been quite strong in
recent times in the dermatological segment. In Dec 2012, Valeant
acquired the entire outstanding common stock of Medicis
Pharmaceutical Corporation for approximately $2.6 billion.
The erstwhile Medicis Pharma focused on the development and
marketing of products for the treatment of dermatological and
aesthetic conditions in the US.
Meanwhile, Allergan, Inc. (AGN) acquired
privately-held SkinMedica, Inc. in Dec 2012 with a focus on the
latter’s topical aesthetics skin care business.
Valeant currently carries a Zacks Rank #3 (Hold). Right now,
Avanir Pharmaceuticals Ltd. (AVNR) looks better
positioned with a Zacks Rank #2 (Buy).
ALLERGAN INC (AGN): Free Stock Analysis Report
AVANIR PHARM (AVNR): Free Stock Analysis Report
OBAGI MEDICAL (OMPI): Free Stock Analysis Report
VALEANT PHARMA (VRX): Free Stock Analysis Report
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