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Valeant Pharmaceuticals to Acquire Bausch & Lomb (VRX)

Canadian drug- maker, Valeant Pharmaceuticals International Inc. (NYSE: VRX) announced on Monday that it has agreed to buy Bausch & Lomb from Warbug Pincus in an all-cash deal estimated at $8.7 billion, a move which is expected to help the company to gain traction in global ophthalmic pharmaceutical market.

The acquisition would allow Valeant to increase product portfolio with products ranging from contact lenses, lens care products to ophthalmic surgical devices and instruments Shares rallied on Tuesday at the New York Stock Exchange while at the Toronto Stock Exchange, shares touched all-time-high.

Commenting over the deal, Valeant Pharmaceuticals’ Chief Executive Michael Pearson said to Reuters during in an interview that the acquisition deal is easily the biggest for Valeant thus far, adding that it (the acquisition) would place the company among top 15 pharmaceuticals companies of the world.

The CEO said that the acquisition of Bausch & Lomb will boost 2013 earnings. “This is a 160-year old company and brand name. I think we’ll be able to really leverage that,” said Pearson while speaking to Reuters. According to Valeant, the acquisition is expected to boost revenue by $3.3 billion in 2013 while adjusted earnings before interest, taxes, depreciation and amortization is expected at $720 million.

The Company said that it will finance the deal both through debt and equity. While $1.5 billion to $2.0 billion will generated by raising fresh equity from the market, Goldman Sachs has agreed for debt-financing.

Mr. Pearson said that the acquisition will help saving $800 million in annual costs by the end of year 2014. Valeant expects job cuts and synergy arising from merger will help in cutting costs such as purchases.

The deal is expected to close in the third quarter, provided it gets regulatory and shareholders’ approval.

While Skadden, Arps, Slate, Meagher & Flom LLP and Osler, Hoskin & Harcourt LLP acted as legal advisers for Valeant, Cleary Gottlieb Steen & Hamilton LLP provided legal advice to Bausch & Lomb.

Goldman Sachs & Co. and J. P. Morgan Securities LLC offered financial advisory to Bausch & Lomb.

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