Valeant Pharmaceuticals hires investment banks to review strategic options

Valeant Pharmaceuticals International Inc, one of the most aggressive acquirers in the global pharmaceuticals industry, is talking to investment banks to review its options after buyout firms and other companies showed interest in some of its units.

Valeant, based in Ontario, is in talks with investment banks that include Goldman Sachs Group and Centerview Partners as it reviews strategic options and seeks advice on dealing with its creditors, Reuters today reported, citing people familiar with the matter.

Valeant CEO Michael Pearson and William Ackman, CEO of activist hedge fund Pershing Square, who is a member of the board of Valeant, have said that the company was considering selling "noncore assets" to help trim its $30-billion debt pile, the report said.

Post this announcement, Valeant has received several inquiries from interested buyers, but the company has yet not decided on selling any major business thus far, the report added.

Some potential buyers have shown interest in Valeant's gastrointestinal division Xifaxin, which came from its 2015 acquisition of Salix Pharmaceuticals for $11 billion (See: Valeant Pharma raises Salix bid to $11.1 bn), as well as its aesthetics products, Obagi and Solta, and its skin care product, CeraVe.

Valeant, which has a product portfolio of about 490 products, has made over 80 acquisitions since 2008 and spent around $36 billion since 2010 on purchasing companies, most of them privately owned.

Last month it cut its 2016 sales and earnings forecast and delayed filing its annual report causing its stock to plunge by nearly 40 per cent.

It has also come under investigation for arbitrarily increasing prices of drugs post acquisitions, including two heart drugs Nitropress and Isuprel, for  which it had acquired sales rights. Valeant raised the price of Nitropress by 212 per cent and Isuprel by 525 per cent.

The troubled Canadian drugmaker is under investigation by six US government agencies over price hike, its accounting practice, and alleged milking the US Medicaid system.

The Canadian Revenue Agency is also scrutinizing the company's books, while investors in Canada and the US are suing the company for insider trading and misrepresentation.

Some analysts have said that Valeant is an Enron in the making, while others have said that the company is like a pack of cards just waiting to collapse.