By Dana Mattioli, Jonathan D. Rockoff and David Benoit
Valeant Pharmaceuticals Inc. agreed to sell its Dendreon cancer business to Chinese conglomerate Sanpower for $820 million, part of an effort by the beleaguered drugmaker to unload assets and pare debt.
Selling the Dendreon business will help Valeant simplify and focus on core areas and innovating, according to a person familiar with the matter.
Valeant, under former Chief Executive Michael Pearson, bought Dendreon, known for prostate-cancer treatment Provenge, for about $500 million in a bankruptcy auction in 2015. The acquisition was Valeant's first big transaction after losing a hostile bid in 2014 for Botox maker Allergan, which went instead to Actavis PLC for about $67 billion.
But Valeant wasn't a big player in cancer, and Provenge proved a disappointing fit. Provenge had $300 million in sales the year before the acquisition; it isn't clear what revenue has been more recently. Valeant, which reported $7.3 billion in total revenue during the first nine months of last year, doesn't break out Provenge sales.
The company's acquisition spree came to a halt when an accounting scandal engulfed it in late 2015. That has helped pummel the Canadian drugmaker's shares, which topped out at over $250 in 2015 and closed Monday at $15.35, giving Valeant a market value of just over $5 billion.
The sale is part of new Valeant CEO Joseph Papa's efforts to focus the company on its key franchises in skin drugs, stomach treatments, eye care and consumer health, while either selling noncore assets or milking them for cash to pay down a $30 billion debt load. Valeant has put a number of assets on the auction block, but has struggled to strike sale agreements at acceptable prices. Most notably, it came close but ultimately failed to seal a deal to sell stomach-drug maker Salix Pharmaceuticals Ltd. to Japan's Takeda Pharmaceutical Co. for $10 billion. Even if Valeant manages to clinch an agreement with Sanpower there is no guarantee regulators will approve it.
Sanpower is a sprawling group with a range of holdings. It teamed up in 2014 to buy Brookstone Holdings Corp., known for selling massage chairs, travel gadgets and other novelties, for more than $100 million at a bankruptcy auction. Sanpower, which owns one of China's oldest department stores, had been on an international acquisition spree, also agreeing to buy House of Fraser, a 165-year-old department-store chain, in a deal that valued the U.K.company at $745 million.
--Kane Wu and Jacquie McNish contributed to this article.
Corrections & Amplifications: Valeant has already sold its Vietnam and Indonesia businesses. An earlier version of this article incorrectly stated that it plans to divest the business. (Jan. 9)
Write to Dana Mattioli at firstname.lastname@example.org, Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and David Benoit at email@example.com
(END) Dow Jones Newswires
January 10, 2017 02:47 ET (07:47 GMT)
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