Speed key to Valeant purchase of Bausch + Lomb

Douglas Bryce

Jan 31, 2014

Armina Ligaya, FP Street, National Post

(Recap)

Billion-dollar deals shouldn’t take days to complete, but Valeant Pharmaceuticals had a small window in which to clinch one of the biggest deals of the year. And if Canada’s largest drug company waited another two more weeks, the company’s chance to snap up eye-care specialist Bausch + Lomb for $8.7-billion may have disappeared.

In the end Valeant, pulled off a deal that solidified its position in the consumer products space while giving its stock a tidy 10% bump on the announcement.

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Valeant’s chief executive Michael Pearson had been eyeing Bausch + Lomb for years but once the decision was made to move ahead, the acquisition came together “extraordinarily fast,” says Doug Bryce, partner at Osler, Hoskin & Harcourt LLP, one of Valeant’s legal advisers on the acquisition. The deal took “days, rather than weeks” — not the typical trajectory for an acquisition like this, he says.

Part of this stemmed from what is called “the Valeant way of life,” a company business model that heavily focuses on acquisitions rather than research and development into new products for growth.

But Mr. Bryce also attributes the speed to Valeant being “fully committed” to the acquisition. “When you get that magical alignment of the stars, with a motivated buyer and a motivated seller, things can happen very quickly,” he says. “And problems have a way of fading into the background.”

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The market seemed happy with the acquisition. Valeant’s stock rose more than 10% from $87 the day before the deal was announced to $95.85 on May 27. That’s an increase not often seen by acquirers, Mr. Bryce says. “It used to be very unusual to see a buyer’s stock rise on the announcement of an M&A transaction, particularly one where it becomes clear they’re going to have to do an equity financing.”

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