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Drugmaker Biovail to buy Valeant in $3.3 billion deal.

TORONTO/BANGALORE: Biovail Corp is to take over U.S-based Valeant Pharmaceuticals International in a complex deal that positions the enlarged firm to better serve the growing baby boomer market.

Worth roughly $3.3 billion, the deal announced early on Monday will take advantage of tax breaks and other savings to create a company that retains the Valeant name and is run by Valeant s existing chief executive, Michael Pearson.

Shareholders of Biovail, Canada s largest publicly owned pharmaceutical company and maker of such drugs as the Wellbutrin depression treatment, will own 50.5 percent of the new firm. Valeant shareholders will own 49.5 percent.

"The merger will create an even stronger player here in Canada, and allows Biovail to take a giant step forward and complete its transition to a new type of company," said Cheryl Reicin, who leads the technology and life sciences practice groups at Torys LLP, one of Canada s top legal firms advising on mergers and acquisitions.

The deal will create a company with cash flow of some $900 million and a focus on products for central nervous system disorders and dermatology -- Valeant products include drugs for skin cancer and epilepsy.

The deal values Biovail shares at a 15 percent premium, based on stock prices over the last 10 trading days, and brings together a major drug-delivery company in Biovail with a major drug developer and manufacturer in Valeant.

The merger creates an entity that will tap the market for neurological drugs for ailments that affect an aging population, like Alzheimer s and Parkinson s.

Pearson said the new company expects to cut 15 percent to 20 percent of its combined workforce of about 4,400. Merging to be a Canadian company lets it obtain a tax friendly corporate structure just as Valeant s tax credits were set to expire.

"We had to do this sooner rather than later from a standpoint of gaining this tax rate," Pearson told Reuters in an interview on Monday.

He said the combined company s tax rate is expected to be in the 10 percent to 15 percent range, Pearson said, and the company planned to use its increased cash flow on share buybacks and tuck-in deals.

Muscat Press and Publishing House SAOC 2009

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Publication:Times of Oman (Muscat, Oman)
Date:Jun 27, 2010
Words:384
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