Another day, another Valeant asset sale rumor. Less than 24 hours after word got out that Valeant and Takeda were in Salix deal talks, the embattled drugmaker is said to be exploring a sale of its eye-surgery business, too.
The equipment business--which Valeant acquired when it snapped up Bausch & Lomb three years back--could nab up to $2.5 billion, The Wall Street Journal reports. But the sale process is still in the early stages, meaning there’s no guarantee it’ll happen.
Valeant has been searching for ways to drum up cash as it struggles under an M&A-fueled mountain of debt. New CEO Joseph Papa has touted divestments as a way to do just that, and influential board member Bill Ackman has suggested an all-out Bausch & Lomb IPO could do the trick, too.
The Canadian pharma isn’t interested in giving up the contact lenses, solutions and prescription eye drugs B&L brought over, though, the WSJ’s sources say, and a spokesman told the newspaper that the “Bausch & Lomb franchise and its dedicated team are a critical part of our business.”
When it comes to other pieces of the puzzle, though? Valeant may finally be ready to bid farewell. The company is “in discussions with third parties for various divestitures,” a spokesman told the Journal.
One thing’s now for sure--those divestitures include Salix, the GI drugmaker whose 2015 purchase created much of the company’s current debt burden. And as the WSJ reported Tuesday, Valeant may have a willing buyer in Takeda, which is reportedly weighing a $10 billion deal that includes $8.5 billion in cash.
That cash could come in handy more than ever, thanks to a federal accounting fraud probe into Valeant’s former relationship with now-dead specialty pharmacy Philidor. If the feds act, the company could owe sizeable penalties, not to mention the hefty legal fees required to deal with this and other investigations, as well as lawsuits.
“We strongly suggest investors consider the risks of potential sizable financial penalties and costly legal actions on a company with more than $30 billion of debt that has already sought debt waivers twice,” Wells Fargo analyst David Maris wrote this week in a note to clients.