Biovail and Valeant to merge
The deal, valued at $3.3bn (€2.6bn) and still subject to approval by shareholders, will establish a new combined entity, Valeant, to be headquartered in Mississauga, Ontario under the leadership of CEO Michael Pearson.
Pearson said the move creates “cost savings [and] efficiencies from extending Biovail's corporate structure and enhanced financial strength and flexibility.”
Part of these savings, some $175m according to reports in the Canadian media, will come from a 20 per cent reduction of combined firm’s headcount.
Market response to the merger, which would create a company with estimated revenue of $900m a year, has been positive with Biovail and Valeant’s share prices climbing 12 and 8 per cent respectively in the hours since it was announced.
CRT Capital analyst Tim Chiang told Reuters that: "It's an interesting transaction from a number of perspectives, but I think it works. It's a win-win for both companies, and I think that's why both stocks are up sharply again today."
