Valeant to sell iNova for $1.25B
Valeant Pharmaceuticals International Inc. announced it would sell its iNova Pharmaceuticals business, which sells prescription and over-thecounter medical products to a company jointly owned by Pacific Equity Partners and The Carlyle Group LP for $1.25 billion as the embattled Laval, Que.-based company stepped up efforts to slash its crushing debt load.
Proceeds from the deal will go toward repaying debt under its senior credit facility. Valeant debt totalled $28.5 billion US as of the first quarter of 2017.
“It’s not my goal to get the debt to zero,” chief executive Joseph Papa told Reuters. “The right place for our debt is somewhere ... in the range of US$15 billion to US$20 billion.”
But analysts said the deal will not make much of a dent in Valeant’s debt loads. The deal would be “slightly deleveraging ” for Valeant, but “will not have much of an impact” on its overall debt levels, particularly after taxes and other payments that could be associated with the deal, analysts at Wells Fargo said in an investor note.
The company’s stock jumped more than 10 per cent in Toronto trading Thursday on the news. Its shares are down more than 7 per cent year-to-date. Valeant’s stock price nosedived in mid-2015 after reports emerged that the company was under congressional investigation in the U.S. over allegations that it had inflated the prices of some of its medical products. Valeant shares were trading over $330 per share in July of 2015.
In early 2016, Valeant CEO Michael Pearson stepped down from his position. His successor, Papa, has since been attempting to restructure the company’s corporate structure through asset sales and a refocusing on a few specific fields, including in dermatology and eye car.
“It’s not a linear, direct improvement every single day. But there’s clearly progress that we’re making,” Papa said at an investor event Wednesday.
The company now looks likely to reach its goal of paying down $5 billion US in debt by February 2018, according to analysts. The company has paid down $4.5 billion US in debt since the first quarter of 2016.