Approximately $8 million in cash will be retained from current Dow accounts, making the net amount paid $277 million. Valeant will make the first payment of $250 million upon closing ($242 million net of cash). In the six-month period following closing, Valeant will fund an escrow account of $35 million, which will be subject to indemnification claims from Valeant for a period of 18 months following closing.
Additionally, Valeant will pay future milestones, based predominately on the achievement of approval and commercial targets for certain pipeline products still in development. The transaction was approved by the boards of directors for both companies and is subject to customary closing conditions, including the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended. The transaction is expected to close by the end of 2008.
The transaction is expected to enhance Valeant’s dermatology franchise in the US through the acquisition of a specialized dermatology R&D organization including a newly approved product and a pipeline of five dermatology products, three of which are in Phase II clinical development.
Michael Pearson, chairman and CEO of Valeant Pharmaceuticals, said: This acquisition grows our scale and capabilities in dermatology thus solidifying Valeant’s future as a leading company in the development and commercialization of dermatology medications.
Gordon Dow, the founder of Dow Pharmaceutical Sciences, and his team are highly regarded with innovative formulation and development expertise, exemplified by having worked on ten dermatology approvals from the FDA in the past few years and with projects underway in eight of the top 10 dermatology diagnoses. We are excited that they will be joining the Valeant team as we believe the synergies between our newly acquired Coria franchise and Dow’s business will provide sustainable growth for many years to come.