MONTREAL _ Valeant Pharmaceuticals will pay down some of its debt after agreeing to sell off parts of the company for US$2.1 billion in two separate transactions.
The Laval-Que.-based pharmaceutical company said Tuesday it will sell three skincare brands _ CeraVe, AcneFree and AMBI _ to Paris-based L’Oreal for US$1.3 billion in cash.
Valeant is also selling its interest in Dendreon Pharmaceuticals to a privately owned Chinese conglomerate, Sanpower Group, for US$819.9 million.
The company said the products included in the L’Oreal deal have annualized revenue of about US$168 million while Dendreon’s only commercialized product is called Provenge, a vaccine for prostate cancer treatment.
The deals, which are expected to close in the first half of 2017, are part of Valeant’s effort to streamline its businesses and reduce debt.
“We are pleased to announce the progress we are making in reshaping our product portfolio and driving value for our shareholders,” Valeant CEO Joseph Papa said.
“Our remaining consumer products business is well positioned for continued advancement within Valeant’s portfolio.”
Vicki Bryan, an analyst with corporate bond research company Gimme Credit, said Valeant got good prices for the assets but will only modestly reduce its massive US$30-billion debt.
Analyst Douglas Miehm of RBC Capital Markets said the sales are positive for the company, but he said the assets being sold are core for the company, even though Valeant has said it planned to sell non-core assets.
“This calls into question whether or not there is any product group or business that is truly viewed as core to management,” he wrote in a report.
He said the sales will reduce Valeant’s 2017 revenues by 3.1 per cent to US$9.2 billion and its adjusted earnings by 5.8 per cent to US$4.78 per share.
Valeant’s shares, which have lost 90 per cent of their value over the past year or so, gained 6.6 per cent or $1.34 at $21.63 in Tuesday afternoon trading on the Toronto Stock Exchange.