Dermatology products developer Valeant Pharmaceuticals International has entered into a definitive agreement to acquire contact lenses developer Bausch + Lomb Holdings for a cash consideration of $8.7bn, as part of its strategy to enhance its eye care business.
The deal is expected to strengthen Valeant’s capabilities in ophthalmic pharmaceuticals and surgical devices and instruments, contact lenses and lens care products.
The combined business will have an estimated pro forma net revenue of over $3.5bn for 2013. The transaction will be immediately accretive to Valeant’s cash earnings per share.
According to the terms of the deal, Valeant will pay approximately $4.5bn to an investor group led by Warburg Pincus and about $4.2bn to repay Bausch + Lomb’s outstanding debt.
Valeant is expected to achieve $800m in annual cost savings by end of 2014. As per the agreement, Bausch + Lomb will retain its name and become a division of Valeant, while existing ophthalmology businesses of Valeant will be merged into the Bausch + Lomb unit.
Bausch + Lomb CEO Brent Saunders said: "Valeant’s acquisition of our company is a testament to the tremendous value our talented employees have created over the past several years."
Valeant CEO Michael Pearson said that Bausch + Lomb’s world-renowned brand, comprehensive portfolio of leading eye care products, and promising late stage pipeline are an ideal strategic fit for Valeant’s current ophthalmology business and the firm is strongly committed to continuing to build a sustainable eye health business.
"With this transaction, Valeant will be a worldwide leader in both dermatology and eye health," Pearson added.