Debt-Ridden Valeant Nears Sale of Its $2 Billion Eye Care Biz Bausch & Lomb

Debt-Ridden Valeant Nears Sale of Its $2 Billion Eye Care Biz Bausch & Lomb June 7, 2017
By Alex Keown, Breaking News Staff

LAVAL, Quebec – As Canada-based Valeant Pharmaceuticals continues to grapple with billions of dollars in debt, the company is moving closer to divesting itself of its Bausch + Lomb eye-surgery assets to Carl Zeiss Meditec for about $2 billion.

Valeant, which was at one time a serial acquirer of companies, snapped up Bausch & Lomb in 2013 for $8.7 billion. The company known for its contact lens and lens-care products, could be relied upon to generate about $1.5 billion in annual revenue.

Cash-strapped Valeant could make the deal within the next few weeks, Bloomberg reported June 6. Rumors of a potential deal, one that has been a long time coming for many investors, sent shares of Valeant up on Tuesday to $12.64 per share, although prices have fallen back a bit this morning to $12.44 per share.

Neither Valeant nor representatives from Carl Zeiss confirmed the two companies were in talks, Bloomberg said. The Bausch + Lomb surgery unit would fit nicely with Carl Zeiss’ business, which includes eyeglass lens manufacturing.

Embattled Valeant has been struggling for more than a year to cut its debt that is nearly $29 billion – all while its revenue stream has been declining. In May, Valeant Chief Executive Officer Joseph Papa said the company has been able to cut $3.6 billion from its debt since the first quarter of 2016. As a result, the company raised its earnings expectations for 2017. The company has a goal of paying down more than $5 billion in debt by the end April 2018.

Earlier this year, Valeant sold off equity interests in Dendreon Pharmaceuticals, Inc., the manufacturer of prostate cancer drug Provenge, to China’s Sanpower Group Co., Ltd. for about $820 million. The company also sold three skincare brands to L'Oréal and divested itself of a manufacturing facility in Brazil.

For a long time, Bausch + Lomb assets were considered off the table for Valeant to sell, but that seems to have changed with the departure of investor Bill Ackman. In April 2016 Ackman, who at one time controlled about 10 percent of company stock, said the Bausch line was not for sale, calling it a core asset. However, in April of this year Ackman washed his hands of the company and took a nearly $3 billion loss when he divested himself of his shares of the company. Ackman first became involved with Valeant in 2014 when he and Pershing backed Valeant’s attempts to acquire Allergan .

In addition to its attempts to pay down its debt, Valeant still faces legal questions from the Philidor scandal. The company has also been facing scrutiny from U.S. lawmakers and two U.S. attorney’s offices over pricing of drugs acquired through acquisitions.

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