Valeant Pharmaceuticals (NYSE:VRX) has launched a hostile bid to acquire smaller U.S. rival ISTA Pharmaceuticals (NASDAQ:ISTA) for $6.50 a share in cash, a deal valued at about $314 million.
The proposal, which represents a premium of 67% over ISTA’s closing price on Dec. 15, also includes the assumption of roughly $13 million in debt.
Valeant has been trying to acquire ISTA since early October. It made a formal written proposal late November to ISTA’s management.
ISTA responded to the letter on Dec. 2 saying it needed more time to review the proposal, it then rejected the deal on Dec. 14.
“Valeant is disappointed by ISTA’s rejection of its proposal and ISTA’s unwillingness to engage in discussions,” the company sad in a statement.
ISTA’s shares have tumbled 66% over the last seven months as sales of one of its key eye treatments have been hurt by the launch of a cheaper generic equivalent. Its stock climbed 72% to $6.70 on news of the Valeant bid.
“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," Valeant CEO Michael Pearson said.
The company says it would be willing to consider improving the offer price if it were allowed to conduct due diligence and found additional value. However, its $6.50 offer will only remain in effect until Jan. 31, according to Valeant.
The buy would help Valeant build out another promoted therapeutic area in the U.S. USTA specializes in ophthalmic pharmaceutical products.