Biovail, Valeant hatch $3.2B reverse merger

The Biovail (NYSE/TSX: BVF) name will soon be no more if a reverse merger with Valeant Pharmaceuticals (NYSE: VRX) goes through as planned. And not only would the $3.2 billion cash-and-stock deal yield a company dubbed Valeant Pharmaceuticals International, but a Valeant executive would take the reins, relegating Biovail CEO William Wells to a post as non-executive chairman.

Here's the skinny: Valeant stockholders will get 1.7809 Biovail shares for each of their Valeant shares, plus a cash dividend of $16.77 per share. As the New York Times DealBook calculates, that's $1.97 billion worth of stock and $1.27 billion in cash. Plus, shareholders of the combined company would get another $1 per share by the end of the year.

The deal already has the blessing of Valeant's largest shareholder, ValueAct Capital, Reuters reports. The firm said it would vote for the merger and would be the largest stockholder in the combined company.

What's that combined company going to look like? Well, the new drugmaker will specialize in remedies for the skin and central nervous system, plus generics for Canada and branded generics in emerging markets. It would have had revenues of $1.75 billion for the 12 months that ended March 31, the companies say; NYT reports it would have posted $1.65 billion in sales for all of 2009. The company expects to find $175 million in "efficiencies" by the second year.

It's going to be headed up by Valeant chief J. Michael Pearson, with an 11 member board that comprises five Biovail reps, five Valeant reps, and one independent. World HQ will be in Mississauga, Ontario, where Biovail is domiciled. It will keep Biovail's operating subsidiary headquartered in Barbados, which owns and manages its intellectual property. And it will have a U.S. HQ, locations to be determined after the deal closes.

- find the joint news release
- check out the NYT article
- get the Globe & Mail news
- see the story from Reuters
- read the Wall Street Journal story