Biovail (BVF), Valeant Pharma (VRX) to Merge in Stock Deal; BVF Shares Up 11% Today
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Canadian drugmaker Biovail Corp. (NYSE: BVF) and Valeant Pharmaceuticals International (NYSE: VRX) announced Monday that they will form a new company under the Valeant brand, in effect validating a recovery by Biovail from dwindling sales and corporate scandals.
A combined entity, according to Biovail and Valeant, would present a position for substantial North American and overseas growth given their size, product lines and fiscal strength.
In a statement issued early this morning, the companies noted that up to 20 percent of the total combined workers will be laid off as a result of the integration process.
“This compelling combination will create tremendous value for stockholders of both companies as our business benefits from cost savings, greater scale, efficiencies from extending Biovail’s corporate structure, and enhanced financial strength and flexibility,” J. Michael Pearson, currently Chairman and CEO of Valeant, said. “We are committed to delivering the anticipated cost savings benefits and, as we did with Valeant over the past two years, transforming the new entity into a diversified, specialty pharmaceutical company focused on growth and cash flow generation.”
Pearson will serve as the new Valeant chief executive officer, while Biovail CEO Bill Wells, will serve as the non-executive chairman of the combined company.
Under the terms of the deal, which have been approved by the Board of Directors of both companies, a merger will give shareholders of Valeant a dividend of $16.77 and 1.7809 shares of Biovail.
Biovail said that its shares have been valued at a 15 percent premium in the deal, and that it will own 50.5 percent of the new company.
The new Valeant will pay a special dividend at the end of the year, which will be its final dividend.
Shares of Biovail are up 11.03 percent to $16.21 in midday market movement Monday, while shares of Valeant are up 26 cents to $46.13.
A combined entity, according to Biovail and Valeant, would present a position for substantial North American and overseas growth given their size, product lines and fiscal strength.
In a statement issued early this morning, the companies noted that up to 20 percent of the total combined workers will be laid off as a result of the integration process.
“This compelling combination will create tremendous value for stockholders of both companies as our business benefits from cost savings, greater scale, efficiencies from extending Biovail’s corporate structure, and enhanced financial strength and flexibility,” J. Michael Pearson, currently Chairman and CEO of Valeant, said. “We are committed to delivering the anticipated cost savings benefits and, as we did with Valeant over the past two years, transforming the new entity into a diversified, specialty pharmaceutical company focused on growth and cash flow generation.”
Pearson will serve as the new Valeant chief executive officer, while Biovail CEO Bill Wells, will serve as the non-executive chairman of the combined company.
Under the terms of the deal, which have been approved by the Board of Directors of both companies, a merger will give shareholders of Valeant a dividend of $16.77 and 1.7809 shares of Biovail.
Biovail said that its shares have been valued at a 15 percent premium in the deal, and that it will own 50.5 percent of the new company.
The new Valeant will pay a special dividend at the end of the year, which will be its final dividend.
Shares of Biovail are up 11.03 percent to $16.21 in midday market movement Monday, while shares of Valeant are up 26 cents to $46.13.
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