Shares of Obagi Medical Products Inc. (OMPI) gained 16 percent on Tuesday, after Germany-based Merz Pharma Group offered a $22 per share acquisition proposal, which is superior to that made by Valeant Pharmaceuticals International Inc. (VRX, VRX.TO).
In March, Obagi, a topical aesthetic and therapeutic skin-health systems provider, agreed to be acquired by Valeant for $19.75 per share in cash. Merz, which had been in talks with Obagi for a possible merger, was taken aback when that deal was revealed.
Merz' offer of $22 per share in cash represents a 58 percent premium to Obagi's closing share price on March 14 - the last trading day prior to the disclosure by Obagi that it had engaged a financial adviser to help explore "all opportunities."
Long Beach, California-based Obagi, with nearly $120 million of revenues in 2012, is known for its dermatology brands such as Obagi Nu-Derm, Condition & Enhance, Obagi-C Rx, ELASTIDerm and CLENZIDerm.
Merz said that Obagi is a natural fit for the company and that the combination would expand its U.S. market presence as well as its dermatology portfolio.
Merz said a deal with Obagi would be structured in the same way as the one with Valeant, except for some minor changes. The company also said it has the necessary cash on hand to fund the deal and does not require additional due diligence.
Obagi stock is trading at $22.92, up 16.29%, on a volume of over 1 million shares on the Nasdaq.
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