UPDATE 2-Valeant to buy PreCision Dermatology for $475 mln

Mon Feb 3, 2014 11:01am EST

By Euan Rocha
    TORONTO, Feb 3 (Reuters) - Valeant Pharmaceuticals
International Inc  said on Monday it has agreed
to acquire privately held PreCision Dermatology Inc for $475
million in cash to strengthen its skin products business.    
    The deal, which is set to close in the first half of 2014,
is expected to immediately add to Valeant's cash earnings per
share after closing. 
    Valeant, Canada's largest listed drugmaker, is striving to
become one of the world's top five pharmaceutical companies by
market capitalization by the end of 2016, largely through
acquisitions, the company said last month. 
    The company has expanded rapidly via a steady stream of
deals, and the latest is consistent with comments by senior
executives in October that the drugmaker was seeking small,
cash-based acquisitions in the near term. 
    "While we note that PreCision is merely a small step toward
Valeant's more ambitious goals of adding $150 billion in market
capitalization by 2016, we think the acquisition, much like
Solta's recent acquisition, makes strategic sense," said Stifel
Nicolaus analyst Annabel Samimy, in a note to clients.
    In December, Valeant said that it had agreed to buy Solta
Medical for about $236 million in cash to add products for
procedures such as skin rejuvenation, skin tightening and body
contouring to its portfolio.    
    Cumberland, Rhode Island-based PreCision, expects revenue of
about $130 million in 2014. J.P. Morgan Securities LLC acted as
PreCision's financial advisor on this deal.  
    PreCision, which makes a range of medical products treating
a number of topical diseases such as acne and atopic dermatitis,
is entitled to an additional $25 million if it achieves a sales
milestone, Valeant said.
    PreCision - formed in 2010 as the result of the spin-out of
Onset Therapeutics, a subsidiary of Collegium Pharmaceutical -
was initially financed by private equity firms Essex Woodlands,
Boston Millennia Partners, Frazier Healthcare and Westfield
Capital Management.
    "This deal is yet another example that there are plenty of
small-mid sized acquisition opportunities available for Valeant"
said BMO Capital Markets analyst Alex Arfaei in a research note.
    Shares in Valeant, which have more than doubled in value in
the last twelve months, fell less than 1 percent to $135.23 in
early New York trading on Monday.
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