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Valeant Said to Approach Swedish Drugmaker Meda on Takeover

Valeant Said to Approach Swedish Drugmaker Meda on Takeover
Valeant Pharmaceuticals International Inc. business cards are displayed in the lobby of company's headquarters in Mississauga, Ontario, Canada. Photographer: Norm Betts/Bloomberg

Valeant Pharmaceuticals International Inc., the drugmaker that has pursued more than 10 acquisitions in the past year, approached Sweden’s Meda AB about a takeover, said two people with knowledge of the matter.

The approach was informal and may not lead to a deal, said one of the people, who declined to be identified because the situation is private. Meda, based in Solna, Sweden, has a market value of about 22.9 billion kronor ($3.6 billion) based on today’s closing stock price.

The companies have a history of doing deals together. Valeant, based in Mississauga, Ontario, said in June it would buy rights to sell two of Meda’s medicines in the U.S. and Canada. Three years ago, Valeant sold its European drug business to Meda, giving the Swedish company access to the faster-growing eastern European and Russian markets. The Wall Street Journal reported the approach yesterday.

“Meda’s board of directors has not received an approach of the kind that is described in the article,” Meda said in a statement today. “However, there are several collaborations between Meda and Valeant including joint ventures in Canada, Mexico and Australia.” Laurie Little, a Valeant spokeswoman, declined to comment.

Meda rose 4.75 kronor, or 6.7 percent, to 75.80 kronor at at the close of trading in Stockholm. It was the stock’s biggest advance since May 4.

Meda Valuation

Meda, Sweden’s second-largest health-care company by revenue after Getinge AB, in May reported first-quarter profit that beat analysts’ estimates. Net income rose to 375 million kronor from 362 million kronor a year earlier. Growth was strong in emerging markets and over-the-counter products, Meda said.

The Olsson family, which owns shipping, offshore-drilling, finance and property companies, holds more than 22 percent of Meda’s stock through its Stena Sessan AB holding company. Bert Ake Eriksson, Stena Sessan’s president, serves on the Meda board.

The drugmaker is trading at about 12 times the 5.84 kronor per share that it may earn in 2012, according to the average estimate of 10 analysts surveyed by Bloomberg. That’s less than the 13 times earnings in the median of a sample of 16 European pharmaceutical companies of similar size, data compiled by Bloomberg show.

Meda sells Bifera, a drug to treat iron deficiency; Cesamet, a treatment for nausea from chemotherapy; Muse, a drug for erectile dysfunction; and Edluar, which helps patients fall asleep. In 2010, the company reported sales of 11.6 billion kronor ($1.6 billion).

Valeant develops and distributes drugs to treat epilepsy and other central nervous system disorders. The company lost a bid for Cephalon Inc. to Teva Pharmaceutical Industries Ltd. in May. Chief Executive Officer Michael Pearson said after that Valeant has been in talks with “multiple” potential acquisition targets and has “irons in the fire around the world.”

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