Merz Pharma's attempt to hijack Obagi Medical Products was short-lived. The German drugmaker has already bowed out of the bidding for Obagi, a skin-products specialist pledged to Valeant Pharmaceuticals ($VRX), just one week after making a public offer for the company.
Merz popped up last Tuesday with a $22-per-share offer for Obagi, outbidding Valeant's agreed-upon deal by $2.25, or about $40 million. But Valeant quickly fired back with a $24 bid. Now, Merz says another counterbid would be too rich, despite Obagi's promising portfolio.
"Obagi was an opportunity worth pursuing given its complementary fit," Merz CEO Philip Burchard said in a statement. "However, Merz is a disciplined buyer and at this level the economics of such a transaction do not meet our requirements."
Valeant obviously has its own ideas about Obagi's portfolio. The Canadian company has been beefing up its dermatology business and figures Obagi's aesthetic product lines can help hedge against pricing pressure on medical treatments. Plus, Valeant chief Michael Pearson sees $40 million worth of "synergies" ripe for cutting.
Meanwhile, Merz will be shopping around for other companies that can complement its injectables business. "We look forward to exploring other acquisition opportunities that fit our strategy," Burchard said.
- read the Merz statement