Valeant Pharma outbids Merz for control of Obagi Medical Products

Canadian specialty pharmaceutical company Valeant Pharmaceuticals International Inc has outbid German drugmaker Merz Pharma Group for control of Obagi Medical Products Inc with a higher $24-per-share offer.

Ontario-based Valeant, the largest publicly traded drug maker in Canada, said its revised $418 million offer has been approved by Obagi's board.

Obagi had last month agreed to be acquired by Valeant for $19.75 per share or about $344 million, but early this week Merz Pharma tabled a $22 per share bid.

Merz said it had been in talks with Obagi before it agreed to Valeant's offer, but was not aware that Obagi was considering signing a deal with another company so quickly.

Given its portfolio of injectables, Merz said that Obagi is a natural fit and the combination would expand its US market presence and strengthen and diversify its dermatology portfolio through additional skin care options.

Frankfurt-based Merz is involved in research, development and sale of innovative drugs and medical products for neurological and clinical dermatology indications and metabolic disorders as well as aesthetics medicine.

Some of its leading products include Memantine, the world's first glutamatergic drug for the treatment of moderate to acute Alzheimer's-induced dementia and botulinum toxin for treating neurological movement disorders.

Merz is an important player in the US aesthetics dermatology market with products like Radiesse, the neurotoxin Xeomin and filler Belotero.

Merz employs 2,391 people worldwide and generates annual revenue of €913 million.

Founded in 1988, California-based Obagi is a specialty pharmaceutical company that develops proprietary topical aesthetic and therapeutic prescription-strength skin care systems.

Obagi's products that uses 'penetrating therapeutics technologies', are designed to improve penetration of agents across the skin barrier for common and visible skin conditions in adult skin, including premature aging, photodamage, hyperpigmentation, acne, sun damage, rosacea, and soft tissue deficits, such as fine lines and wrinkles.

Obagi had 2012 revenues of about $120 million.

Valeant has recently been acquiring several small dermatology and aesthetics companies in the US, including Medicis Pharmaceuticals Corp for $2.6 billion, in September 2012. (See: Canada's Valeant to acquire Medicis Pharmaceutical for $2.6 bn)

With a market cap of $22.4 billion and annual revenues of $3.5 billion, Valeant has a product portfolio of about 490 products, including two drugs in the top 200 bracket by sales in the US. Its main markets are in the US, Canada, Mexico, Brazil, Europe and Australia.

Valeant has made over 60 acquisitions since 2008, including some recent ones like Sanofi's skincare unit Dermik, Ortho Dermatologics, a unit of Johnson & Johnson, Lithuania-based specialty pharmaceuticals company AB Sanitas, Russian peer Natur Produkt International, some assets of Austrian pharmaceutical company Gerot Lannach Eyetech, a stake in Brazil's Probiotica Laboratorios, certain branded generic assets of Mexican pharmaceutical company Atlantis Pharma and US-based Pedinol Pharmacal, and OraPharma.

Although Valeant is an aggressive acquirer, it has walked out from bidding wars in the past.

It refused to hike its offer for Ista Pharmaceuticals after Bausch & Lomb tabled a higher bid and walked away from a bidding war with Teva Pharmaceutical Industries for Cephalon Inc.