MRX Medicis Pharmaceutical Corp.

Valeant Pharmaceuticals International, Inc. (VRX) is a step closer to acquiring Medicis Pharmaceutical Corp. (MRX) with the US Federal Trade Commission granting the early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976.

Valeant Pharma had announced its intention to acquire specialty pharmaceutical company, Medicis Pharma in September 2012. The companies signed a definitive merger agreement under which Valeant Pharma will acquire Medicis Pharma for $44.00 per share in cash. The deal is expected to be worth approximately $2.6 billion.

On December 7, 2012, a special meeting will be held for Medicis Pharma’s shareholders. The stockholders will vote on the acquisition proposal. The deal is expected to close within four business days following the satisfaction of all closing terms and conditions. At the time of announcing the deal, Valeant Pharma stated that the acquisition is expected to boost its earnings immediately after the closure.

We note that Medicis Pharma is engaged in the development and marketing of products for the treatment of dermatological and aesthetic conditions in the US. Key products include Solodyn, Perlane, Restylane, Ziana, Dysport and Zyclara. The impending merger will broaden Valeant Pharma’s product portfolio significantly and is expected to create a global leader in the dermatological field.  

We note that the dermatological segment has been in the spotlight this year. Apart from Valeant Pharma’s impending acquisition of Medicis Pharma, the acquisition of specialty dermatology generics company, Fougera Pharma by Novartis (NVS) in July 2012, has also been in the news. Moreover, Allergan, Inc. (AGN) recently announced that it has entered into an agreement with a privately held company, SkinMedica, Inc. to acquire the latter’s topical aesthetics skin care business.

Our Recommendation

We currently have an Outperform recommendation on Valeant Pharma. The stock carries a Zacks #1 Rank (Strong Buy rating) in the short run.

 
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