Valeant makes latest divestment as business unravels
- Valeant announced Thursday morning that it will divest its iNova Pharmaceuticals business for $930 million. The company said the proceeds of the sale will help repay term loan debt under its Senior Secured Credit Facility. The deal is expected to close in the second half of 2017.
- The over-the-counter business, which makes weight management and cough and cold products, is being sold to a fund that is owned by Pacific Equity Partners and The Carlyle Group.
- iNova’s leading markets positions, according to Valeant, are in South Africa and Australia. Valeant says it will maintain its presence in those places through its Bausch & Lomb business.
CORRECTION: A previous version of this article incorrectly stated the time period when Papa promised to lower debt and inferred that the Dendreon deal had already closed.
Valeant’s troubles are never-ending, and fairly new CEO Joe Papa has been making an effort to pay down the company’s $31 billion in debt over the last several months by selling off pieces of the business – a business that was built through a string of bolt-on acquisitions under former CEO Mike Pearson. So far, Valeant has been able to reduce its debt to about $26 billion as of the end of the first quarter. Papa promised in August 2016 that he would pay down $5 billion in debt over the next 18 months.
This deal to sell off iNova is Papa's latest effort in a restructuring toward a “new Valeant.” Valeant had bought iNova for $657 million in 2011, including upfront and milestone payments, and the business brought in about $200 million annually in revenues, according to the last public disclosure in 2012.
Valeant has long been rumored to be looking to sell the two most fruitful pieces of its business — the Salix Pharmaceutical portfolio that it bought for $11 billion, and the Bausch & Lomb eyecare business — but so far neither of those sales have come to fruition.
Late last year, it was reported that a sale of the Salix portfolio to Takeda for as much as $10 billion was imminent. Yet, that sale never happened.
The most recent speculation came this week from a report in Bloomberg that suggested Valeant was ready to sell off the surgical products unit of Bausch & Lomb to medical device maker Carl Zeiss Meditec. The report speculates that the unit could go for as much as $2 billion.
Valeant unloaded Dendreon prostate cancer assets for $2.1 billion in January, announcing the sale during the closely watched J.P. Morgan Healthcare Conference. The deal has yet to close.
Yet, analysts are not impressed with the iNova sale. Evercore ISI analyst Umer Raffat wrote in a note to clients this morning that "the transaction simplifies the geographic footprint a bit for Valeant, but... its debt neutral (i.e., not de-levering)."
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