Drug company Valeant Pharmaceuticals International is shedding four of its brands — three skincare and one cancer treatment business — and experts say it's good money, considering what the company original bought those brands for.
French cosmetics company L'Oréal is purchasing three skincare brands from Valeant for $1.3 billion. It’s part of the Canada-based drugmaker’s attempt to shed some of its nearly $30 billion in debt.
The three brands that L'Oréal is buying are CeraVe, AcneFree and Ambi, which were each bought by Valeant between 2008 and 2012 for a total of about $150 million, according to estimates by Evercore ISI.
Valeant is also looking to sell its Dendreon cancer treatment business, which makes the drug Provenge, in a separate deal to China's Sanpower Group for $819.9 million. The drugmaker acquired Dendreon for $495 million in 2015 when it went into bankruptcy, which equates to about a 66 percent return on just two years.
As for those skincare lines, L'Oréal said it plans to offer them alongside its other Active Cosmetics division brands, including Vichy and La Roche-Posay, which, according to experts, have seen strong growth and a resiliency during rougher consumer spending periods. The CeraVe brand is known for its face cleansers and moisturizers, as well as baby products, and is seen as one of the fastest-growing brands in the U.S. The other two brands — AcneFree and Ambi — are also focused on facial beauty, the first on eliminating acne and the second on brightening skin and treating dark spots.
Valeant’s main company operations include its gastrointestinal, dermatology and eyecare businesses, the latter coming under fire legally recently. As the parent company of Bausch + Lomb, Valeant was investigated by congressional panels, the Federal Trade Commission and the U.S. Securities and Exchange Commission. According to the FTC case, a May 2015 acquisition of Paragon reduced the competition for products related to eyewear. The FTC ordered Valeant to divest Paragon in order to settle those charges.
Now, with this sale, the company is attempting to regain investor confidence and rid itself of the debt that was piled on with the investigations. Some analysts predict that Valeant may sell its dental business over time. On Tuesday (Jan. 10), shares of Valeant popped up 14 percent.
Valeant is also the parent company of Synergetics USA, Salix Pharmaceuticals and Solta Holdings Inc.