Canadian drugmaker Valeant Pharmaceuticals International, Inc. (VRX,VRX.TO) said Wednesday that it has agreed to buy Obagi Medical Products, Inc. (OMPI) for $19.75 per share in cash.
The acquisition of Obagi, a provider of topical aesthetic and therapeutic skin health systems, will enable Valeant Pharmaceuticals to boost its dermatology and aesthetics portfolio. Following the announcement, shares of Obagi are gaining 28 percent in pre-market trades.
The offer price represents a 28 percent premium to Long Beach, California-based Obagi's closing share price of $15.39 on Tuesday, March 19, the last trading day prior to announcement. The transaction is expected to close in the first half of 2013.
Under the terms of the deal, Valeant Pharmaceuticals will commence a tender offer for all outstanding shares of Obagi at $19.75 per share in cash. The tender offer is conditioned on the tender of a majority of Obagi's shares calculated on a diluted basis.
Obagi's board of directors has unanimously approved the transaction. Following the successful completion of the tender offer, a wholly-owned subsidiary of Valeant will merge with Obagi and the outstanding Obagi shares not tendered in the tender offer will be converted into the right to receive the $19.75 per share in cash paid in the tender offer.
Valeant Pharmaceuticals said it expects the transaction to be immediately accretive to its cash earnings per share. The company expects the combination to yield cost synergies at an annual run rate of at least $40 million within six months of closing.
Obagi is a provider of topical aesthetic and therapeutic skin-health systems. The company's product portfolio includes dermatology brands such as Obagi Nu-Derm, Condition & Enhance, Obagi-C Rx, Elastiderm and Clenziderm. Obagi had total revenue of about $120 million in 2012.
Michael Pearson, chairman and chief executive officer of Valeant Pharmaceuticals said, "The acquisition of Obagi will be a valuable supplement to Valeant's current dermatology portfolio and will further build upon our growing aesthetics franchise. Obagi is a leader in the physician dispensed market and enjoys a strong brand perception among physicians."
VRX closed Tuesday's trading at $71.44, up $0.90 on a volume of 2.82 million shares.
OMPI closed Tuesday's trading at $15.39, up $0.35 on a volume of 114,500 shares. In Wednesday's pre-market, the stock is up $4.31 or 28.01 percent to $19.70.
by RTT Staff Writer
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