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8-K - FORM 8-K - VALEANT PHARMACEUTICALS INTERNATIONAL | y85144e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
VALEANT AND BIOVAIL AGREE TO MERGE
Combination Creates Leader in Specialty Pharmaceuticals
Accretive to Stockholders of Both Companies in First 12 Months
Combined Operating Cash Flow on a Trailing 12-Month Basis of $575 Million
$175 Million in Annual Cost Synergies Fully Captured by Second Year
Strong Cash Flow to Support Future Growth and to Strengthen Balance Sheet
ALISO VIEJO, Calif. and TORONTO, Ontario June 21, 2010 Valeant (NYSE: VRX) and Biovail
(NYSE/TSX: BVF) today announced that both companies Boards of Directors have unanimously approved
a definitive merger agreement under which the companies would combine to generate enhanced value
for stockholders. The combined company will be called Valeant Pharmaceuticals International, Inc.
(the new Valeant).
Valeant and Biovail believe the new Valeants scale, financial strength and complementary product
lines will enable it to pursue substantial growth opportunities. The combined company will have a
significantly expanded presence in North America and operations in eight other countries, working
across four growth platforms. The new Valeant will be able to leverage its complementary product
lines and operations in specialty Central Nervous System (CNS), Dermatology, Canada and emerging
markets/branded generics. In addition, the combined company will have limited patent exposure and
enjoy strong and stable cash flows from legacy products that will support future growth. The new
Valeant, on a 12-month trailing basis as of March 31, 2010, would have experienced double-digit
revenue growth.
Under the terms of the agreement, Valeant stockholders will receive a one-time special cash
dividend of $16.77 per share immediately prior to closing of the merger and 1.7809 shares of
Biovail common stock upon closing of the merger in exchange for each share of Valeant common stock
they own. Upon the completion of the merger, which is expected to occur before the end of the
year, Biovail stockholders will own approximately 50.5 percent and Valeant stockholders will own
approximately 49.5 percent of the shares of the combined company on a fully diluted basis. For
Biovail stockholders, this transaction represents a 15 percent premium based on a calculation of
the stock prices over the last 10 trading days. It is anticipated that by December 31, 2010,
contingent upon the closing of the merger and subject to approval by the new Valeants Board of
Directors and to applicable law, the combined company will pay an additional one-time $1.00 per
share dividend to all stockholders of the new combined entity, after which the new Valeant does not
intend to pay dividends. To finance the transaction, the companies have secured a commitment of
$2.8 billion through a term loan facility provided by Goldman Sachs Bank USA,
Morgan Stanley & Co.
Incorporated, and Jefferies & Company, Inc. Existing Valeant 7.625% and 8.375% senior unsecured
notes will be refinanced as part of the transaction.
J. Michael Pearson, currently Chairman and Chief Executive Officer of Valeant, will serve as the
new Valeants Chief Executive Officer, residing in Barbados, and Bill Wells, currently Chief
Executive Officer of Biovail, will be the non-executive Chairman. The new Valeants Board of
Directors will consist of 11 members, including five Biovail representatives, five Valeant
representatives and one additional independent Canadian resident director to be identified through
a search process and nominated by Valeant and agreed upon by Biovail. Robert A. Ingram, currently
lead director of Valeant, will serve as lead independent director of the new Valeants Board.
Michael Van Every, currently Chairman of Biovails Audit Committee, will serve in the same function
for the combined Board.
The new Valeant will retain Biovails corporate structure and related financial efficiencies,
leading to enhanced financial performance. Following the completion of the merger, it is
anticipated that the transaction will be cash EPS accretive to both companies stockholders within
the first 12 months post-close.1 On a trailing 12-month basis as of March 31, 2010, the
combined company would have had pro forma revenues of $1.75 billion and pro forma cash flow from
operations of $575 million. The new Valeant expects to generate at least $175 million in annual
cost synergies in the second year.
Mr. Pearson said, This compelling combination will create tremendous value for stockholders of
both companies as our business benefits from cost savings, greater scale, efficiencies from
extending Biovails corporate structure, and enhanced financial strength and flexibility. 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.
Dr. Douglas J.P. Squires, Chairman of the Biovail Board of Directors, said, The combination of
Biovail and Valeant creates a new leader in specialty pharmaceuticals by combining two highly
successful management teams in our industry. Our Board is enthusiastic about the opportunities the
combination will bring for shareholders and employees of both companies.
Mr. Wells added, With strong cash flows, substantial synergy opportunities and minimal patent
risk, the new Valeant presents the opportunity to create shareholder value at a level that would
not have been possible for either company on a stand-alone basis. Moreover, the combined company
will preserve the advantageous Biovail corporate structure.
G. Mason Morfit, Chairman of Valeants Special Committee and Partner at ValueAct Capital, Valeants
largest stockholder, said, I am excited about the significant benefits this transaction delivers
to stockholders of both companies. The merger of Valeant and Biovail creates more opportunities to
continue the financial performance Valeant stockholders have enjoyed over the past two years and
creates an exciting platform for continued aggressive growth. ValueAct Capital is committed to
keeping Valeant as a top position in our portfolio and to voting for this transaction. Once the
merger is complete, ValueAct Capital will be the largest stockholder of the combined company, and I
will serve on its Board of Directors.
Following completion of the merger, the new Valeant will be headquartered in Mississauga, Ontario
and will remain a Canadian domiciled corporation, listed on both the Toronto and New York Stock
Exchanges. In addition, the combined company will retain Biovails existing
1 | Cash EPS is calculated as net income from continuing operations adjusted for certain items such as amortization expense, non-cash interest and other financing charges, deferred taxes, acquired in-process research and development and one-time and other special or restructuring charges, divided by the average number of shares determined on a fully-diluted basis. Accretion for Valeant stockholders assumes after-tax return on the $16.77 per share dividend in excess of 0.8 percent annual return. |
principal operating
subsidiary in Barbados, which will continue to own, manage, control and develop intellectual
property for the combined company. The location of the combined companys U.S. headquarters will
be determined after the close of the transaction.
Approvals
The transaction is subject to approval by Valeant and Biovail stockholders and the satisfaction of
customary closing conditions and regulatory approvals, including anti-trust and competition law
approvals in the U.S. and certain other foreign jurisdictions.
Advisors
Goldman, Sachs & Co. and Jefferies & Company, Inc. are serving as financial advisors, and Skadden,
Arps, Slate, Meagher & Flom LLP and Ogilvy Renault LLP are serving as legal counsel to Valeant.
Morgan Stanley & Co. Incorporated is serving as financial advisor and Cravath, Swaine & Moore LLP
and Blake, Cassels & Graydon LLP are serving as legal counsel to Biovail.
Conference Call
Valeant and Biovail will host a conference call and a live Internet webcast along with a slide
presentation today at 8:30 a.m. EDT (5:30 a.m. PDT) to discuss this combination. The dial-in
number to participate on this call is (877) 295-5743, confirmation code 83365938. International
callers should dial (973) 200-3961, confirmation code 83365938.
A replay will be available for one week following the live webcast through June 28, 2010. The live
webcast of the conference call may be accessed through the investor relations section on Valeants
web site at www.valeant.com and Biovails web site at www.biovail.com. Participants should allow
approximately five to ten minutes prior to the presentations start time to visit the site and
download any streaming media software needed to listen and view to the Internet webcast.
About Valeant
Valeant Pharmaceuticals International (NYSE:VRX) is a multinational specialty pharmaceutical
company that develops, manufactures and markets a broad range of pharmaceutical products primarily
in the areas of neurology and dermatology. More information about Valeant can be found at
www.valeant.com.
About Biovail
Biovail Corporation (NYSE:BVF) is a specialty pharmaceutical company engaged in the formulation,
clinical testing, registration, manufacture, and commercialization of pharmaceutical products. The
Company is focused on the development and commercialization of medicines that address unmet medical
needs in niche specialty central nervous system (CNS) markets. For more information about Biovail,
visit the Companys Web site at www.biovail.com.
Currency
All dollar references herein are to U.S. dollars.
Caution Regarding Forward-Looking Information and Safe Harbor Statement
To the extent any statements made in this document contain information that is not historical,
these statements are forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
may be forward-looking information as defined under applicable Canadian securities legislation
(collectively, forward-looking statements).
These forward-looking statements relate to, among other things, the expected benefits of the
proposed merger such as efficiencies, cost savings, tax benefits, enhanced revenues and cash flow,
growth potential, market profile and financial strength; the competitive ability and position of
the combined company; the expected timing of the completion of the transaction; and the expected
payment of a one-time cash dividend. Forward-looking statements can generally be identified by the
use of words such as believe, anticipate, expect, estimate, intend, continue, plan,
project, will, may, should, could, would, target, potential and other similar
expressions. In addition, any statements that refer to expectations, projections or other
characterizations of future events or circumstances are forward-looking statements. Although
certain of these statements set out herein are indicated above, all of the statements in this
release that contain forward-looking statements are qualified by these cautionary statements.
Although Valeant and Biovail believe that the expectations reflected in such forward-looking
statements are reasonable, such statements involve risks and uncertainties, and undue reliance
should not be placed on such statements. Certain material factors or assumptions are applied in
making forward-looking statements, including, but not limited to, factors and assumptions regarding
the items outlined above. Actual results may differ materially from those expressed or implied in
such statements. Important factors that could cause actual results to differ materially from these
expectations include, among other things, the following: the failure to receive, on a timely basis
or otherwise, the required approvals by Valeant and Biovail stockholders and government or
regulatory agencies (including the terms of such approvals); the risk that a condition to closing
of the merger may not be satisfied; the possibility that the anticipated benefits and synergies
from the proposed merger cannot be fully realized or may take longer to realize than expected; the
possibility that costs or difficulties related to the integration of Valeant and Biovail operations
will be greater than expected; the ability of the combined company to retain and hire key personnel
and maintain relationships with customers, suppliers or other business partners; the impact of
legislative, regulatory, competitive and technological changes; the risk that the credit ratings of
the combined company may be different from what the companies expect; and other risk factors
relating to the pharmaceutical industry, as detailed from time to time in each of Valeants and
Biovails reports filed with the Securities and Exchange Commission (SEC) and, in Biovails case,
the Canadian Securities Administrators (CSA). There can be no assurance that the proposed merger
will in fact be consummated.
Additional information about these factors and about the material factors or assumptions underlying
such forward-looking statements may be found in the body of this release, as well as under Item
1.A. in each of Valeants and Biovails Annual Report on Form 10-K for the fiscal year ended
December 31, 2009, and Item 1.A in each of Valeants and Biovails most recent Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2010. Valeant and Biovail caution that the
foregoing list of important factors that may affect future results is not exhaustive. When relying
on forward-looking statements to make decisions with respect to Valeant and Biovail, investors and
others should carefully consider the foregoing factors and other uncertainties and potential
events. Neither Biovail nor Valeant undertakes any obligation to update or revise any
forward-looking statement, except as may be required by law.
Additional Information
In connection with the proposed merger, Valeant and Biovail plan to file with the SEC a
Registration Statement on Form S-4 that will include a joint proxy statement of Valeant and Biovail
that also constitutes a prospectus of each of Valeant and Biovail. Valeant and Biovail will mail
the joint proxy statement/prospectus to their respective stockholders. INVESTORS ARE URGED TO READ
THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION. You will be able to obtain the joint proxy statement/prospectus, as well as other
filings containing information about Valeant and Biovail, free of charge, at the website maintained
by the SEC at www.sec.gov and, in Biovails case, on SEDAR at www.sedar.com. You may also obtain
these documents, free of charge, from Valeants website (www.valeant.com) under the tab Investor
Relations and then under the heading SEC Filings, or by directing a request to Valeant, One
Enterprise, Aliso Viejo, California, 92656, Attention: Corporate Secretary. You may also obtain
these documents, free of charge, from Biovails website (www.biovail.com) under the tab Investor
Relations and then under the heading Regulatory Filings and then under the item Current SEC
Filings, or by directing a request to Biovail, 7150 Mississauga Road, Mississauga, Ontario,
Canada, L5N 8M5, Attention: Corporate Secretary.
The respective directors and executive officers of Valeant and Biovail and other persons may be
deemed to be participants in the solicitation of proxies in respect of the proposed transaction.
Information regarding Valeants directors and executive officers is available in its definitive
proxy statement filed with the SEC by Valeant on March 25, 2010, and information regarding Biovail
directors and executive officers is available in its definitive proxy statement filed with the SEC
and CSA by Biovail on April 21, 2010. These documents can be obtained free of charge from the
sources indicated above. Other information regarding the interests of the participants in the
proxy solicitation will be included in the joint proxy statement/prospectus and other relevant
materials to be filed with the SEC and the CSA when they become available. This communication
shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation
of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. No offer of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as
amended.
Contact Information:
Contact for Valeant
|
Contact for Biovail | |
Laurie W. Little
|
Nelson F. Isabel | |
949-461-6002
|
905-286-3000 | |
laurie.little@valeant.com
|
ir@biovail.com |