Valeant pharma to acquire Obagi Medical Products for $343.8m

Canadian multinational specialty pharmaceutical company Valeant Pharmaceuticals has entered into a definitive agreement with Obagi Medical Products, under which Valeant will acquire Obagi’s all of the outstanding common stock shares for an approximate amount of $343.8m.

The transaction, which is expected to completed by the first half of 2013, was approved by Obagi’s board of directors.

The transaction once completed all Obagi’s shares will join Valeant’s current outstanding stock, which is expected to be immediately increasing Valeant’s cash earnings per share.

The combination is expected to yield cost synergies at an annual run rate of at least $40m within six months of closing.

As per the terms of the agreement, Valeant will commence a tender offer for all outstanding shares of Obagi at a price of $19.75 per share in cash.

The tender offer will based on the tender of a majority of Obagi’s shares calculated on a diluted basis, besides on the receipt of certain regulatory approvals and other customary closing conditions.

After successful completion of the tender offer, one of Valeant’s wholly owned subsidiary will merge with Obagi and the outstanding Obagi shares not tendered in the tender offer will be converted into the right to receive the same $19.75 per share in cash paid in the tender offer.

Valeant chairman and chief executive officer Michael Pearson said the firms decision to acquire Obagi will be a valuable supplement to its current dermatology portfolio and will further bolster its growing aesthetics franchise.

"Obagi is a leader in the physician dispensed market and enjoys a strong brand perception among physicians. The addition of their products will not only strengthen and diversify our dispensed portfolio, but also expand our market presence with dermatologists and plastic surgeons," Pearson added.

Obagi is a US-based topical aesthetic and therapeutic skin-health systems company, whose product portfolio includes major dermatology brands such as Obagi Nu-Derm, Condition & Enhance, Obagi-C Rx, ELASTIDerm and CLENZIDerm.

Obagi registered an approximate total revenue of $120m in 2012.