Valeant in Talks With Actavis on Merger of Generic Drug Makers

Valeant Pharmaceuticals International Inc. (VRX) and Actavis (ACT) Inc., two makers of generic drugs, have been in talks on a merger, people familiar with the matter said.

The discussions have been going on for some time, though it is unclear if the companies will reach an agreement, said one of the people, who declined to be identified because the negotiations are private. The Wall Street Journal reported that Valeant is seeking to acquire Actavis for more than $13 billion, citing people familiar with the matter.

Laurie Little, a spokeswoman for Montreal-based Valeant, declined to comment, saying the company doesn’t speak about “market rumors or speculation.” Charlie Mayr, a spokesman for Morristown, New Jersey-based Actavis, also declined to comment citing company policy not to speak about “rumors or speculation about business development activities.”

Valeant sells branded and generic drugs, including a variety of skin care products, and earlier this month bid $24 a share for Obagi Medical Products Inc., a maker of prescription skin cream products. The company’s bid topped a competing offer from Merz Pharma GmbH. Valeant yesterday said 85 percent of Obagi’s shares had been tendered and the purchase was completed.

Valeant has announced or completed 17 deals since January 2010, including its $2.6 billion purchase of Medicis Pharmaceutical Inc., a skin-care products company, in 2012, according to data compiled by Bloomberg.

Cephalon Rejection

The Montreal-based drugmaker’s 2011 hostile takeover of Cephalon Inc. was rejected by shareholders who later accepted a $6.2 billion bid from Teva Pharmaceutical Industries Ltd., the world’s largest maker of generic drugs.

Valeant had sales of $3.5 billion in 2012 and a market value of $22.2 billion as of today’s close. The company’s shares have gained 31 percent in the past 12 months.

Actavis, the biggest U.S. generic drugmaker, was formed last year when Parsippany, New Jersey-based Watson Pharmaceuticals bought Actavis Group hf for about $5.5 billion. The company changed its name in November to Acatavis because the brand was more familiar worldwide, officials said at the time.

Actavis generated $5.9 billion in 2012 revenue and had a market value of $12.9 billion as of today’s close, according to data compiled by Bloomberg. The company’s shares have increased 36 percent in the past 12 months.

To contact the reporters on this story: Jeffrey McCracken in New York at jmccracken3@bloomberg.net; David Welch in New York at dwelch12@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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