Valeant Pharmaceuticals International Inc. (NYSE: VRX) shares made a solid gain on Thursday after the company announced the sale of its iNova Pharmaceutical business. Ultimately, Valeant will sell iNova for a total of $930 million to a company jointly owned by funds advised and managed by Pacific Equity Partners and Carlyle Group.
iNova markets a diversified portfolio of prescription and over-the-counter products in several fields that include weight management, pain management, cardiology and cough and cold. Currently, iNova holds leading market positions in Australia and South Africa and also has an established platform in Asia. It operates in over 15 countries worldwide.
The company intends to use the proceeds from the sale to permanently repay term loan debt under its senior secured credit facility. The transaction is expected to close in the second half of 2017, subject to customary closing conditions, including receipt of applicable regulatory approvals.
Joseph C. Papa, board chair and chief executive of Valeant, commented:
The sale of iNova is part of the company’s ongoing efforts to both simplify our operating model and strengthen our balance sheet. We will continue to evaluate opportunities that will enable us to deliver on our commitments and unlock value for shareholders.
So far this year Valeant has underperformed the broad markets, with the stock down 16%, excluding Thursday’s move. In fact in just the past 52 weeks the stock is down 50%.
Shares of Valeant were trading up 8.5% at $13.20 on Thursday, with a 52-week range of $8.31 to $32.74. The company has a market cap of $4.6 billion.