Valeant Said to Consider Sale of Egyptian Drugmaker Amoun

  • Amoun may attract interest from management, other drug firms
  • Company also said to consider selling Latin American assets

Valeant Pharmaceuticals International Inc. is considering the sale of Egyptian drugmaker Amoun Pharmaceutical Co. as the beleaguered Canadian company seeks to accelerate its debt-reduction plans, according to people with knowledge of the matter.

Amoun may attract pharmaceutical companies with an interest in expanding in emerging markets, the people said, asking not to be identified because the deliberations are private. The Egyptian company’s current executives could also pursue a management buyout with help from financial investors, though no final decision has been made, the people said.

Valeant is working with Goldman Sachs Group Inc. on the sale, which is at a preliminary stage, the people said. Valeant agreed to acquire Amoun’s holding company Mercury Holdings last year for about $800 million, plus some contingent payments. Valeant’s intentions at the time were to use Amoun as a platform to further expand in the Middle East and Africa.

Amoun is the largest domestic drugmaker in Egypt, Valeant said last year when it announced the purchase. The company offers both veterinary and human medicines in the region and sells antibiotics, anti-diarrheals and drugs that fight high blood pressure, among other products.

The company is also weighing a sale of some of its Latin American operations, two of the people said. Street Insider reported on Valeant’s plans for Latin America Wednesday.

Valeant shares rose 6.5 percent Thursday to close at $25.48 in New York.

Representatives for Valeant, Amoun and Goldman declined to comment.

Debt Load

Valeant is selling non-core assets to reduce its $31 billion debt load. The company is eyeing the sale of some of its smaller cosmetic and pharmaceutical assets, including dermatology firm Obagi Medical Products Inc., the Provenge treatment for advanced prostate cancer and some drugs it acquired from Marathon Pharmaceuticals last year, people familiar with the matter have said.

The company’s Salix Pharmaceuticals unit agreed to pay $54 million to settle a U.S. lawsuit accusing it of paying kickbacks to doctors for prescribing its products, prosecutors said Thursday.

Valeant agreed to buy Salix for about $11 billion last year, beating out a rival bid from Endo International Plc in its biggest ever acquisition, according to data compiled by Bloomberg.

On Tuesday, Valeant for the second time this year cut its forecast for earnings before interest, taxes, depreciation and amortization, a measure of earnings widely followed by lenders. Ebitda is projected to drop to $4.8 billion to $4.95 billion, down from a March estimate of $5.6 billion to $5.8 billion.

That puts Valeant right up against financial thresholds it has to maintain to comply with its agreements with lenders, who are watching closely after Valeant’s business has suffered under pressure from politicians and the health insurers. If the company doesn’t stay in compliance with earnings and debt-coverage thresholds, the lenders could demand repayment.

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