05/27/2013 08:12 EDT | Updated 07/27/2013 05:12 EDT

Valeant Pharmaceuticals Buys Bausch & Lomb For $8.7 Billion U.S.

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UNITED STATES - AUGUST 08: Boxes of Bausch & Lomb's ReNu contact lens solution flank a competitor's brand on a pharmacy shelf in West Orange, New Jersey Tuesday, August 8, 2006. Bausch & Lomb Inc. slashed its 2006 earnings forecast by almost 80 percent after the eye-care company withdrew a contact lens cleaner linked to an infection that causes blindness. The company has lost market share and faces legal expenses related to the recall of its MoistureLoc solution, which generated about $100 million in sales last year. (Photo by Emile Wamsteker/Bloomberg via Getty Images)

LAVAL, Que. - Valeant Pharmaceuticals Inc. (TSX:VRX) has confirmed it's buying Bausch + Lomb Holdings for US$8.7 billion in cash.

The Montreal-area company based in Laval, Que., will finance the deal by issuing up to $2 million of new equity, with the remainder paid for with debt.

It expects to achieve at least US$800 million in annual cost savings by the end of 2014.

Bausch + Lomb is best known for its contact lenses and solutions but it also operates in other segments of the health-care industry.

There were reports last week that a deal was in the works.

They announced jointly that the boards of the two companies have unanimously approved the deal.

About half the purchase price will be used to repay Bausch + Lomb's outstanding debt and $4.5 billion will go to an investor group led by Warburg Pincus.

UPDATE: A unit of eye care company Bausch & Lomb on Friday pleaded guilty to charges it used kickbacks and improper marketing to boost sales of a drug meant to treat eye pain and agreed to pay $33.5 million to settle criminal and civil liability, Reuters reports.

Ista Pharmaceuticals Inc ... pleaded guilty to conspiracy to offer kickbacks to induce physicians to prescribe Xibrom, a drug meant to treat pain after cataract surgery, and conspiracy to promote that drug for unapproved uses, including after Lasik and glaucoma surgeries.

Ista agreed as part of a criminal settlement to a $16.63 million fine and an $1.85 million asset forfeiture. It also agreed to a $15 million civil settlement to resolve allegations that its marketing of Xibrom caused false claims to be submitted to government health care programs.

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