Germany’s Merz has topped an earlier offer by Valeant Pharmaceuticals for dermatology specialist Obagi Medical Products, raising the possibility of a bidding war for the business.
Merz Pharma’s $22-per-share bid values Obagi at around $385m, a premium to Valeant’s $19.75-a-share offer last month which was equivalent to around $360m.
Canada-based Valeant entered into a definitive agreement with Obagi on March 20, but Merz indicates in a statement that it was already involved in merger discussions with Obagi at that time and had first made an overture to the company back in January.
Germany-based Merz said it was disappointed it was “not made aware that Obagi was contemplating signing a deal with another party on an accelerated timeframe”, but has cash on hand to complete a deal quickly.
Obagi sells a portfolio of topical aesthetic and therapeutic products with sales of around $120m in 2012, mainly in the US. Merz said its own portfolio of injectables, which includes products such as HyalACP and Belotero for wrinkle and lip filling, makes the two companies a “natural fit” in the aesthetics market.
Merz’ offer comes at a time when Obagi shareholder Michael Rubin has filed a lawsuit seeking to block the merger with Valeant on the grounds that it undervalues the company and does not take into account future growth prospects.
Rubin’s suit also claims that the Valeant agreement includes clauses that block other companies from coming forward with offers for Obagi.
If Merz wins the tug-of-war, it will not be the first time that Valeant has seen an acquisition wrested from its hands, having lost out to Teva in a bidding war for Cephalon in 2011. It also withdrew from a merger offer for eyecare specialist Ista Pharmaceuticals, which was eventually bought by Bauch + Lomb last year.
“Our proposal is clearly superior to the Valeant transaction,” said Merz in a letter to Obagi’s board.
“We are confident that your stockholders will appreciate the enhanced value that our proposal would deliver to them and will enthusiastically support it.”