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Battle lines drawn as Valeant ups Obagi bid

Hits back against Merz offer

Battle lines drawn as Valeant ups Obagi bid

Valeant Pharmaceuticals has responded to a rival bid for dermatology specialist Obagi Medical Products from Merz with a higher offer of its own.

Valeant hiked its offer yesterday from $19.75 per share to $24 per share, pushing it ahead of Merz Pharma's $22 per share bid that was proffered on April 2. Obagi's board immediately accepted the new terms and recommended shareholders take up the offer, which is valid until midnight on April 23.

The sweetened deal values Obagi at around $418m, around three-and-a-half times its $120m annual revenues. At the time of writing Merz had not issued a response to the new bid.

Shares in Valeant fell nearly 5 per cent on the announcement on investor concerns of a bidding war that could dilute the value of the deal, despite assurances from the company that it would not end up paying too much for Obagi. Shares in Obagi rose 10 per cent on the raised bid to over $25.

Valeant has been on a particularly acquisitive streak in the last few years, and has been concentrating on speciality business in areas like dermatology, ophthalmology, dental and over-the-counter (OTC) medicines.

Last year it snapped up skincare company Medicis in a $2.6bn deal that added Botox rival Dysport (abobotulinumtoxin A) to its portfolio along with a range of wrinkle treatments, and has also paid $345m for Johnson & Johnson's Ortho Dermatologics and $425m for Sanofi's Dermik skincare business.

Obagi would add products such as the Nu-Derm range of moisturisers and prescription products distributed through dermatology and plastic surgery clinics for conditions such as premature aging, photodamage, hyperpigmentation, acne, sun damage and facial redness.

4th April 2013

From: Sales

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