Valeant Working With Banks to Review Options: Reuters

  • Drugmaker has previously said it may sell `non-core' assets
  • Company has received inquiries, with Xifaxan a possible target

Valeant Pharmaceuticals International Inc. is working with investment banks to review options after receiving interest in a number of its businesses, Reuters reported Thursday.

The drugmaker has previously said that it might dispose of certain “non-core” assets as it seeks to pay down some of its $32 billion in debt and return to stable footing after a disastrous eight-month run that has seen its stock lose almost 90 percent of its value.

Reuters cited people familiar with the matter, without saying where they got the information. Valeant shares were up 1.5 percent to $32.85 at 6:56 p.m. in New York, after the market closed. Laval, Quebec-based Valeant hasn’t decided on selling any businesses so far, Reuters said.

The company is working with investment banks including Goldman Sachs Group Inc. and Centerview Partners, Reuters reported. Valeant has received inquiries from potential bidders, Reuters said, with interest in Xifaxan, a treatment for irritable bowel syndrome and the biggest-selling product in the gastrointestinal division. Others that might be targets include skin-care product lines Obagi, Solta and CeraVe, Reuters said.

Potential Sales

Last month, Valeant’s departing Chief Executive Officer Mike Pearson flagged the potential for asset sales on a conference call.

A spokeswoman for Valeant declined to comment on the Reuters report.

Valeant grew into a pharmaceutical giant by doing dozens of deals worth tens of billions of dollars, cutting costs and folding the new products into its operations. Yet over the past eight months, Valeant shares have tumbled from the August peak of $262.52, after the company was criticized for charging high prices for its drugs, has been investigated by Congress and the U.S. Securities and Exchange Commission, and said it will restate earnings. It also cut guidance and said Pearson will leave once a successor is found.

On Thursday, Legg Mason Inc.’s Bill Miller said he bought Valeant shares, betting that the price of the embattled drugmaker could double.

If necessary, Valeant could sell some of the assets it acquired for at least 80 percent of what it paid for them, Miller said. With the proceeds in hand, the company would be able to cut its debt and the stock should rebound, he said.

With “the recent collapse down here to the $30 range, from our standpoint it looks like the values are there,” Miller said in an interview after remarks at the Engage International Investment Education Symposium in downtown Chicago. At its one-time high, the stock was overvalued, he said. “But is it worth more than $30? Yeah, we think so.”

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