L'Oréal buys skin-care brands from drug firm; China's Sanpower lands cancer business
By Dana Mattioli, David Benoit and Jonathan D. Rockoff
Valeant Pharmaceuticals International Inc. reached deals to sell $2.1 billion in assets, the struggling drug company's biggest moves yet to refocus around its consumer offerings and pare its heavy debt load.
The Canadian company agreed to sell three skin-care brands, including its CeraVe line, to French cosmetics giant L'Oréal SA for $1.3 billion. It also said it would sell its Dendreon cancer business to Chinese conglomerate Sanpower for $820 million.
The asset sales are part of Valeant Chief Executive Joseph Papa's efforts to sharpen the company's focus on its key franchises in skin drugs, stomach treatments, eye care and consumer health while selling noncore assets to pay down its roughly $30 billion in debt.
Later Tuesday, Mr. Papa will speak at the J.P. Morgan Healthcare Conference in San Francisco, where analysts and investors are anticipating updates on his vision for Valeant. The former Perrigo Co. CEO joined Valeant in May to help restore battered investor confidence.
Valeant's stock has collapsed since late 2015, when an accounting issue raised questions about its earnings and spurred a crisis of confidence in management. The company's backers have consistently argued the stock market has ignored the value of the underlying businesses,while its detractors have focused on the company's debt and slumping earnings.
The stock rose around 5.1% to $16.13 early Tuesday afternoon, but it is still down 82% over the past 12 months and is well below the all-time highs above $260 set in August 2015.
Valeant's deal announcements eased concerns that the company would have to sell assets at fire-sale prices. It purchased CeraVe in 2008 for $95 million and bought Dendreon out of bankruptcy in 2015 for about $500 million.
"Some good news finally," Evercore analyst Umer Raffat headlined his note on the sales, saying the reduced revenue would mostly be offset by the lower debt payments.
In a Tuesday note, Wells Fargo & Co. analyst David Maris noted that the proceeds from the sales wouldn't fully cover the $3.8 billion in debt Valeant has coming due by the end of 2018.
Valeant has put a number of assets on the auction block but has struggled to strike deals at acceptable prices. 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. It is also exploring a sale of its Bausch & Lomb surgical equipment business, which could fetch $2.5 billion, people familiar with the matter have said.
Dendreon is known for prostate-cancer treatment Provenge. 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.
Valeant wasn't a big player in cancer treatments, 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.
The CeraVe brand includes cleansers, moisturizers and healing ointments. The other brands -- AcneFree and Ambi -- encompass a range of acne treatments. L'Oréal, one of the world's leading cosmetics suppliers, said the three have combined revenue of around $168 million a year.
For L'Oréal, the deal will expand its U.S. presence and add to its offerings that cross between skin treatments and beauty products. Skin care is now the beauty industry's largest category, accounting for a quarter of the market, but growth has begun to cool in recent years.
--Nick Kostov contributed to this article.
Write to Dana Mattioli at email@example.com, David Benoit at firstname.lastname@example.org and Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
January 11, 2017 02:48 ET (07:48 GMT)
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