* Valeant cites purchase of Bausch & Lomb, hostile unions
* Galenika needs 50 million euro of additional capital in
* Galenika debt stands at 170 million euros
By Aleksandar Vasovic
BELGRADE, June 7 Canada's Valeant has
pulled out of a possible bid for a Serbian drug company in the
wake of its $8.7 billion purchase of contact lenses maker Bausch
Citing last months's acquisition deal, as well as the
hostility of local unions towards the purchase of Galenika
Pharmaceuticals, Valeant Pharmaceuticals International Inc said
it had decided not to follow up its letter of intent relating to
the company's privatisation.
The decision leaves Serbia with a problem, since Valeant was
the only declared bidder for Gelenika, whose planned sale is
part of the Socialist-nationalist government's deficit-cutting
Belgrade is trying to sell a number of bloated, loss-making
state enterprises, including Galenika, to ease the burden on its
budget, which the government puts at 4.6 percent of gross
domestic product this year, and to reduce debt seen at 65
percent of GDP in 2013.
With a workforce of 2,700, Belgrade-based Galenika has
accumulated debt of about 170 million euros ($224 million) and
needs about 50 million euros in additional capital in 2013.
Earlier this month, Serbian police arrested a group of eight
former Galenika managers after prosecutors charged them with
abuse of office and embezzling 12 million euros ($15.8 million)
in 2008 and 2009.
Mirko Bogdanov, head of the European unit of Valeant
Pharmaceuticals North America, said his company had decided not
to proceed with the Serbian deal.
"Major reasons for this decision are (the) recently
announced agreement to acquire ... Bausch & Lomb ... and
publicly expressed hostile attitude of Galenika ... trade unions
and employees," Bogdanov said in a letter to Serbian Finance
Minister Mladjan Dinkic.
Officials from the Serbian Finance Ministry were not
immediately available for comment.
Dozens of Galenika union activists had protested on Thursday
in front of the government building in central Belgrade,
demanding an end to privatisation efforts and a state bailout
Zoran Pantelic, head of company's Independence Union, said
the privatisation would deprive consumers of cheap medications.
"If we sell the only domestic drugmaker ... cartels will be
deciding about prices of medications, which will then likely
rise three or four times," Pantelic said in a TV broadcast.
Last week, the finance ministry extended the deadline for
Valeant to submit its plans about the sale of Galenika to June
14, the fourth extension since offers were first invited on Jan.
($1 = 0.7579 euros)
(Editing by David Holmes)