BUSINESS
05/24/2011 04:24 EDT | Updated 07/24/2011 05:12 EDT

Valeant Pharmaceuticals To Acquire AB Sanitas In $500 Million Deal

MISSISSAUGA, Ont. (CP) -- Valeant Pharmaceuticals International Inc. (TSX:VRX) plans to acquire Lithuania-based drug company AB Sanitas in a cash and share deal worth just over $500 million.

Mississauga, Ont.,-based Valeant said Tuesday major shareholders of AB Sanitas have agreed to sell Valeant 87.2 per cent of the Baltic region company, of which at least 82.6 per cent will be delivered when the transaction closes.

After the acquisition of this controlling block of shares, Valeant will be required under Lithuanian takeover rules to acquire the remaining minority interest.

The total purchase price is expected to be about euro314 (C$432.6) million in cash, in addition to the assumption of about euro50 million (C$69 million) in debt, Valeant said in a release.

The sellers of the 27.1 million Sanitas shares to Valeant are Citigroup Venture Capital International Jersey Limited and Baltic Pharma, Invalda AB, Amber Trust II S.C.A. and other investors.

Sanitas, based in Kaunas, Lithuania, has a portfolio of 390 generic drugs in nine countries throughout central and eastern Europe, primarily Poland, Russia and Lithuania.

The company trades on the Vilnius Stock Exchange.

Sanitas has in-house development capabilities in dermatology, ophthalmology and hospital injectables and a robust pipeline of internally developed and acquired dossiers. Annual revenues for Sanitas are expected to be more than euro100 million (C$137 million) in 2011, with an approximate revenue growth rate in the low double digits over the coming years.

The deal is expected to close by the end of September and the mandatory tender offer is expected to be finalized in the fourth quarter.

Valeant said the transaction is expected to immediately add to the company's revenues and profits.

"The acquisition of Sanitas should provide Valeant with an exciting opportunity to expand our European branded generics product portfolio with dermatology and hospital injectable compounds that have a strong track record of growth and profitability," said chairman and CEO J. Michael Pearson.

"With 80 per cent of the Sanitas portfolio consisting of non-reimbursed products with limited exposure to government pricing pressures, Valeant will be in a key position to continue our expansion into central and eastern Europe."

Valeant, formerly known as Biovail, is a multinational specialty drug company that develops, manufactures and sells treatments for neurology and dermatology ailments and branded generics.

In trading on the Toronto Stock Exchange on Tuesday, Valeant shares rose 86 cents to $49.18, a gain of 1.8 per cent.

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