Valeant Hires Morgan Stanley to Sell Dermatology Assetsby
Sale of Valeant’s Obagi, Solta could fetch up to $500 million
Process to sell assets set to kick off as early as this week
Valeant Pharmaceuticals International Inc. is working with advisers at Morgan Stanley as it weighs the sale of dermatology units Obagi Medical Products and Solta Medical to raise cash to reduce debt, according to people familiar with the matter.
The two businesses could fetch as much as $500 million and attract interest from other pharmaceutical companies, the people said, asking not to be identified because the deliberations are private. The sale process could start as early as this week, they said.
Representatives at Valeant and Morgan Stanley declined to comment.
Valeant shares rose 1.1 percent to $24.04 at 9:41 a.m. in New York. The stock has slumped 76 percent this year, valuing the company at $8.2 billion.
Valeant bought the maker of prescription skin-care products Obagi in 2013 for about $418 million. Later that year, it agreed to buy Solta for about $250 million. Solta designs, makes and sells medical devices for aesthetic applications such as wrinkle and acne treatments.
Valeant is selling non-core assets to reduce its $31 billion debt load. The company is weighing the sale of some of its smaller cosmetic and pharmaceutical units, including 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 is also seeking to reduce its exposure to emerging markets, which could lead to the sale of its Latin American operations as well as Egyptian drugmaker Amoun Pharmaceutical Co., people have said.
The company’s shares have fallen about 90 percent in the last 12 months, after a series of setbacks including scrutiny of the company’s pricing practices, cuts to guidance and the departure of Chief Executive Officer Mike Pearson.
Earlier this month, Valeant cut its forecast for earnings before interest, taxes, depreciation and amortization for the second time this year. 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, the company said. That puts Valeant up against financial thresholds it has to maintain to comply with its agreements with lenders.