Merz Pharma GmbH walked away from an effort to buy Obagi Medical Products Inc., saying it didn’t want to top Valeant Pharmaceuticals International Inc.’s $418 million offer.
Merz, a closely held German drugmaker, will look for other acquisition opportunities, the Frankfurt-based company said in a statement today. Obagi, a Long Beach, California-based maker of prescription skin-care products, declined to below the Valeant offer in U.S. trading, showing investors no longer expect a higher bid.
“Obagi was an opportunity worth pursuing given its complementary fit with Merz’s portfolio of injectables,” said Merz Chief Executive Officer Philip Burchard in the statement. “However, Merz is a disciplined buyer and at this level the economics of such a transaction do not meet our requirements.”
Valeant announced March 20 an agreement to buy Obagi for $19.75 a share in cash. Merz on April 2 made an unsolicited offer of $22 a share. Obagi the next day accepted a sweetened offer from Valeant of $24 a share, or about $418 million.
Obagi dropped 5.7 percent to $23.98 at 4 p.m. New York time. The stock has risen 76 percent this year and closed on April 4 at the highest price since the shares began trading in 2006. Valeant, based in Montreal, rose less than 1 percent to $72.12 in New York.
Obagi’s biggest product is Nu-Derm, a treatment to reduce signs of aging on the skin. The therapy had about $62 million in sales last year.
Voce Capital LLC, a hedge fund, last year began pushing for a sale of the company.