Valeant decided to approach ISTA’s board after management rejected offer.

Valeant Pharmaceuticals has taken its $314 million offer to buy ISTA Pharmaceuticals to the firm’s board of directors after being snubbed by company management. The company is proposing to pay $6.50 per share in cash, a roughly 67% premium over ISTA’s closing price of $3.89 on December 15.  ISTA has net debt of approximately $13 million, bringing the total enterprise value to approximately $327 million.

Valeant initially approached ISTA on October 5.  After ISTA refused to enter into a customary confidentiality agreement with Valeant, the company made a formal written proposal to ISTA’s management on November 23.  ISTA responded to this letter on December 2, stating that it needed more time to review Valeant’s proposal.  Valeant reaffirmed its proposal to ISTA on December 12, and ISTA rejected this offer on December 14. 

“The proposed $6.50 per share price represents a meaningful premium to ISTA’s recent trading performance, and we believe it represents a compelling opportunity for ISTA’s shareholders in light of the continuing challenges facing ISTA,” states J. Michael Pearson, chairman and CEO of Valeant. “We would be willing to consider improving our offer price if we were allowed to conduct due diligence and found additional value.

“We have already devoted significant time and resources to pursing this potential transaction,” Pearson adds. “Therefore, consistent with our past disciplined approach to acquisitions, our $6.50 offer will only remain in effect until January 31, 2012.”

On November 22, Financial News Network Online reported that ISTA had the highest debt to EBITDA ratio in the pharmaceuticals industry of 16.7. ISTA markets prescription eyecare products in the U.S. The company’s pipeline covers ocular pain and inflammation, allergic rhinitis, and age-related macular degeneration.

Valeant Pharmaceuticals is a specialty pharmaceutical company that develops, manufactures, and markets a range of pharmaceutical products primarily in the areas of neurology, dermatology, and branded generics.

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