Hungry for ISTA, Valeant makes bid

Canada's Valeant Pharmaceuticals ($VRX) will push for at least one more acquisition before the holidays: U.S.-based rival ISTA Pharmaceuticals ($ISTA).

The unsolicited bid for the California-based eye treatment maker is worth about $327 million including net debt, Dow Jones Newswires reported. The $6.50 per share offer is 67% higher than the company's Thursday stock price closing of about $3.89.

Why such a premium? Well, for ISTA, the deal can help put the company out of its current misery. Reuters reports that ISTA has faced a plunging stock price in recent months because of competition from Mylan's ($MYL) new generic version of its treatment for eye inflammation and pain. In a statement, Valeant CEO J. Michael Pearson said the offer reflects "a compelling opportunity" for shareholders in light of some of those troubles. He even said the company would improve its offer if allowed to conduct due diligence, according to the report. (Maybe this is holiday-inspired generosity?)

But ISTA also has plenty of drugs in its pipeline, thus giving Valeant something valuable, too. In October, for example, ISTA reported positive Phase III data for its drug Prolensa to treat pain and inflammation stemming from cataract surgery. An NDA filing is expected in early 2012. On the other hand, the company's Remura ophthalmic solution to treat dry eye faced a Phase III setback, not meeting statistical significance. The company said at the time it would look to the over-the-counter market instead. Overall, ISTA has nailed down 5 product approvals in 6 years, Dow Jones reports.

For Valeant, which sells neurology, dermatology and branded generic drugs, the bid is yet another way to expand. The company has been hungry in recent months. In November, it agreed to buy iNova Pharmaceuticals for $624 million, and recently finished an $84 million bid to buy Canada's Afexa Life Sciences, which makes cold and flu medicine. Valeant also tried to buy Cephalon for $5.7 billion, but Teva Pharmaceuticals ($TEVA) knocked it out of contention with a higher bid, Reuters noted.

ISTA shareholders must now consider Valeant's bid. And analysts aren't sure if it will succeed, Dow Jones states, because of potential culture clash issues.

- here's the release
- check out the Dow Jones story
- here's the Reuters story

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