Merz Pharma has elected not to raise its $385m offer for dermatology specialist Obagi Medical Products, clearing the way for a takeover by rival Valeant Pharmaceuticals.
Merz made an offer for Obagi last week that trumped an earlier $360m offer from Valeant but bowed out of the bidding after Valeant came back to the table with a $24-per-share offer that valued the business at around $418m.
“Obagi was an opportunity worth pursuing given its complementary fit,” said Merz chief executive Philip Burchard in a statement.
“However, Merz is a disciplined buyer and at this level the economics of such a transaction do not meet our requirements,” he added, noting that Merz will be exploring other acquisition opportunities.
Obagi’s management seemed to favour a merger with Valeant, and the withdrawal of Merz now sets the clock ticking on Valeant’s bid which expires on April 23 and is conditional on a majority of Obagi shares being tendered by the midnight deadline.
Analysts have suggested that it is unlikely any other buyers will emerge at this late stage.
The offer for Obagi comes after a string of acquisitions by Valeant in the dermatology sector. Last year, it bought skincare specialist Medicis in a $2.6bn deal that added Botox rival Dysport (abobotulinumtoxin A) to its portfolio along with a range of wrinkle treatments. This was after earlier deals for Johnson & Johnson’s Ortho Dermatologics and 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.