Mergers and Acquisitions

(Individual assignment)

Valeant Pharmaceuticals International Inc acquisition of Bausch &

Lomb Inc

Submitted To:

Submitted By:

Prof. Shiv Nath Sinha

Rishab Khemka
Roll No.: 2014231

RISHAB KHEMKA (2014231)

Contents

Sl No.

Topic

Pg. No.

Valeant Pharmaceuticals International Inc acquisition of

Bausch & Lomb Inc

About Bausch & Lomb Inc

About Valeant Pharmaceuticals International Inc

Motive

Industry Point of View: Is there a Consolidation in the

Industry-

Structuring and Financing a Deal

Management Structure

Synergy

Exhibit 1: Consolidate Income Statement for Valeant

Pharmaceuticals International Inc

10

Exhibit 2: Consolidate balance Sheet for Valeant

Pharmaceuticals International Inc

11

Trend of Share Price for Valeant Pharmaceuticals

International Inc. After Merger

10

12

References:

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RISHAB KHEMKA (2014231)

Valeant Pharmaceuticals International Inc acquisition of Bausch & Lomb Inc

Laval, Quebec and Rochester, NY May 27, 2013 Valeant Pharmaceuticals International,
Inc. (NYSE: VRX) (TSX: VRX) and Bausch + Lomb Holdings Incorporated, the global eye health
company, today announced that they have entered into a definitive agreement under which Valeant
will acquire Bausch + Lomb for $8.7 billion in cash.
Bausch + Lomb is a leading global eye health company that operates in three segments:
Pharmaceutical (including prescription brands, generics and over-the-counter (OTC)), Vision Care
(contact lenses and solutions), and Surgical (intraocular lenses and surgical equipment). Bausch
+ Lomb has a broad portfolio of eye health products, including well-known prescription and OTC
brands Besivance, Lotemax, Ocuvite and PreserVision; vision care brands Biotrue
ONEday,PureVision, renu and Boston; and surgical brands enVista, Storz, Stellaris and VICTUS.
Under terms of the agreement, which was unanimously approved by the Board of Directors of both
companies, Valeant will pay aggregate consideration of $8.7 billion in cash, of which
approximately $4.5 billion will go to an investor group led by Warburg Pincus and approximately
$4.2 billion will be used to repay Bausch + Lomb's outstanding debt. Valeant expects to achieve
at least $800 million in annual cost savings by end of 2014. Bausch + Lombs expects to have
revenues of approximately $3.3 billion and adjusted EBITDA in 2013 of approximately $720
million. The transaction is expected to be immediately accretive to Valeant's cash earnings per
share. Assuming the transaction occurred on January 1, 2013 and assuming the full realization of
synergies, the acquisition would have been approximately 40% accretive to Valeants expected
2013 Cash EPS.

About Bausch & Lomb Inc

Bausch + Lomb is a leading global eye health company that is solely focused on protecting,
enhancing, and restoring people's eyesight. Its core businesses include ophthalmic
pharmaceuticals, contact lenses and lens care products, and ophthalmic surgical devices and
instruments. It globally develops, manufactures and markets one of the most comprehensive
product portfolios in the eye health industry, which are available in more than 100
countries. Founded in 1853, the company is headquartered in Rochester, NY, and employs more
than 11,000 people worldwide.
Over the last 150 years, Bausch + Lomb has become a global hallmark for innovation and
quality. Their talented and motivated colleagues work relentlessly to invent new materials,
engineer new technologies, and ultimately bring new innovations to help people see better to live
better.

RISHAB KHEMKA (2014231)

About Valeant Pharmaceuticals International Inc

Valeant Pharmaceuticals International, Inc. (NYSE/TSX:VRX) is a multinational specialty

pharmaceutical company that develops, manufactures and markets a broad range of
pharmaceutical products primarily in the areas of dermatology, neurology and branded generics.
Valeant Pharmaceuticals International, Inc. is a diverse and decentralized pharmaceutical company
that is committed to focusing on our key stakeholders while delivering consistently high
performance. Our values provide the overall direction for our company, and provide us with the
tools necessary to rise to any challenge by leveraging our collective hard work and effort along
with our unwavering competitive spirit. These values help us set goals based on our organizations
potential and what we hope it will become.

Motive
Bausch + Lomb will retain its name and become a division of Valeant. Valeants existing
ophthalmology businesses will be integrated into the Bausch + Lomb division, creating a global
eye health platform with estimated pro forma 2013 net revenue of more than $3.5 billion. The
acquisition positions Valeant to capitalize on growing eye health trends driven by an aging patient
population, an increased rate of diabetes and demand from emerging markets. The combined
business will also benefit from access to a strong product portfolio and a late stage pipeline of
innovative, new products
Valeants Chairman and Chief Executive Officer, J. Michael Pearson, said, "We are excited to
announce the acquisition of Bausch + Lomb, which will transform Valeant into a global leader in
eye health by significantly strengthening our capabilities in ophthalmic pharmaceuticals, contact
lenses and lens care products, and ophthalmic surgical devices and instruments. Bausch + Lombs
world-renowned brand, comprehensive portfolio of leading eye care products, and promising late
stage pipeline are an ideal strategic fit for our current ophthalmology business and we are strongly
committed to continuing to build a sustainable eye health business. With this transaction, Valeant
will be a worldwide leader in both dermatology and eye health.

RISHAB KHEMKA (2014231)

Industry Point of View: Is there a Consolidation in the Industry-

April 21, 2015: Today, Israeli drug maker Teva announced that it wants to buy fellow generic
manufacturer Mylan, worth $40 billion, in what would be the tenth largest pharma deal of all time.
The hostile takeover bid, aimed at beefing up Tevas generic drugs business, comes just weeks
after Mylan announced it was attempting to buy Perrigo for around $30 billion.
The buying spree by global drug companies is being driven in part by big companies depleting
drug pipelines and less fruitful investments in drug discoveries. Drug companies are also facing
greater competition from new drugs, and a race to the bottom on corporate tax rates. High stock
prices, low interest rates, and a healthy market for corporate debt havent hurt.
There have been more mergers and acquisitions announced in the pharmaceutical industry from
Jan. 1 to April 21 of this year than during the same period of any year over the last decade,
according to finance software company Dealogic. 2009, the year of the largest pharma buyout on
record, Pfizers $111.7 billion purchase of Warner-Lambert, is the only year thats come close.
The below chart shows 2015s year-to-date M&A total under two scenarios, and compares those
with the Jan. 1 to April 21 period of years past.

RISHAB KHEMKA (2014231)

Unlike 2009, this years total hasnt been driven by a few outsized deals. So far this year, only
Abbvies $20.9 billion deal for Pharmacyclics, and either of the Mylan deals that may go through,
would crack the top 20 biggest pharma deals of all time.
Drug companies are following the growth spurt in M&A overall, which has skyrocketed in recent
years due the growing economy and extremely cheap debt. If Tevas deal goes through, there will
have been more M&A activity in the past four months than in all but four full years of the past
decade:

RISHAB KHEMKA (2014231)

Structuring and Financing a Deal

The transaction will be financed with debt and approximately $1.5 - $2.0 billion of new
equity. Valeant has secured fully committed debt financing for the transaction from Goldman
Sachs Bank USA. Taking into account the anticipated equity raise, Valeants debt to pro forma
adjusted EBITDA ratio will be approximately 4.6 times. A combination of bank debt and bonds;
approximately 55% bank debt and 45% bonds

Management Structure

Mr. Saunders will join Valeant in an advisory role to help ensure a seamless transition and
integration and Fred Hassan, Chairman of Bausch + Lombs Board of Directors, will join Valeants
Board of Directors. In addition, Dan Wechsler, Executive Vice President and President of Bausch
+ Lombs Global Pharmaceuticals, will join Valeant as Executive Vice President and Company
Group Chairman, Ophthalmology and Eye Health. Bausch + Lombs Chief Medical Officer
Calvin W. Roberts, M.D. will also join Valeant as its Chief Medical Officer, Ophthalmology and
Eye Health. We also anticipate additional members of the senior management team to join
Valeant.

Synergy

Corporate HQ to remain in Laval, Quebec

Continued use of Bausch + Lomb name
Best of the Best selection process for personnel to build a stronger organization
Synergies expected in corporate, commercial, and operational areas, while preserving key B+L
strengths

At least $800mm in annual run rate cost synergies from both companies expected to be achieved by end
of 2014.

RISHAB KHEMKA (2014231)

Exhibit 1: Consolidate Income Statement for Valeant Pharmaceuticals

International Inc

RISHAB KHEMKA (2014231)

Exhibit 2: Consolidate balance Sheet for Valeant Pharmaceuticals International

Inc

RISHAB KHEMKA (2014231)

Trend of Share Price for Valeant Pharmaceuticals International Inc. After Merger

Source: https://www.google.com/finance?q=NYSE%3AVRX&ei=hg2yVbm3H9eN0AT73KG4DQ

RISHAB KHEMKA (2014231)

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References:

http://finance.yahoo.com/q/bs?s=VRX+Balance+Sheet&annual
http://finance.yahoo.com/q/is?s=VRX+Income+Statement&annual
http://www.bausch.com/our-company/newsroom/2013-archive/valeant-pharmaceuticalsinternational-inc-to-acquire-bausch-lomb#.VbIPfvmqqkp
http://www.bausch.com/redirectpage?Url=http://www.valeant.com#.VbIPuPmqqko

RISHAB KHEMKA (2014231)

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