Deal maker Valeant reaches for biggest prize yet

Tue Apr 30, 2013 3:28pm EDT
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By Rod Nickel and Jessica Toonkel

WINNIPEG/NEW YORK (Reuters) - After five years and some 60 deals that have turned Valeant Pharmaceuticals International Inc (VRX.TO: Quote) into a stock market darling with a market capitalization of $22 billion, Chief Executive Michael Pearson still has some surprises up his sleeve.

One was the Canadian drugmaker's pursuit of U.S.-based generic pharmaceutical company Actavis Inc ACT.N, a prize worth more than $13 billion that would be both Valeant's biggest deal by far and a move into less familiar territory.

The deal stalled after the companies failed to agree on terms, people familiar with the situation said. An Actavis spokesman declined to comment and Valeant did not respond to inquiries. It was not clear if the deal could be revived.

Montreal-based Valeant, known for prescription drugs such as anti-depressant Wellbutrin and over-the-counter remedies such as Cold-FX, has built up its dermatology and anesthetics portfolio in a dozen deals in the past year, most recently for Obagi Medical Products.

When Canada's Biovail Corp acquired California-based Valeant in 2010 for $3.3 billion, assuming its name but keeping the head office in Canada, the deal signaled the brisk pace of M&A that was to follow.

Pearson, a former director at consulting firm McKinsey & Co and a proud Eagle Scout, the highest rank in the Boy Scouts program, left McKinsey to become Valeant CEO in 2008 and quickly began snapping up dermatology products like sunscreen and anti-aging items in a plan with aggressive revenue growth targets.

He tapped Howard Schiller, a former chief operating officer of the investment banking division at Goldman Sachs (GS.N: Quote), to be his chief financial officer in 2011, a move that has helped Valeant's acquisitive strategy.

"I am pleased with what we have achieved ... but will not be satisfied until we join the ranks of the true industry leaders," Pearson said in the company's 2012 annual report.   Continued...