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Valeant Being Acquired in $3.3B Deal

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Aliso Viejo-based Valeant Pharmaceuticals International is combining with Canada’s Biovail Corp. in a deal valued at $3.3 billion.

The deal is expected to close by the end of the year and is set to create a drug maker with $1.7 billion in yearly sales.

Shareholders of Biovail, a maker of antidepressant, pain and other drugs, are set to own 50.5% of the new company.

The combined company is set to take on the Valeant name and be based at Biovail’s headquarters in Mississauga, south of Toronto.

A U.S. headquarters site is set to be selected after the deal closes.

Valeant Chief Executive J. Michael Pearson, a native of London, Ontario, is set to run the company.

He’ll be based in Barbados, where Biovail has operations and founder Eugene Melnyk lives.

Shares of the new Valeant are set to trade on the New York and Toronto stock exchanges.

The deal combines two smaller, specialty drug makers.

Valeant makes neurology, antiviral and generic drugs as well as medical cosmetics. It has yearly sales of about $830 billion.

Biovail, Canada’s largest publicly traded drug maker, has yearly sales of about $850 million. It makes antidepressant Wellbutrin XL, pain drug Ultram ER, a blood pressure drug and other medications.

The deal is the largest in a series by Valeant’s Pearson.

In the past two years, Valeant has made 16 deals to buy drug makers or products in a bid to build business in its target markets.

The Biovail deal closes a chapter in the storied life of Valeant.

The company got its start as ICN Pharmaceuticals Inc. under founder Milan Panic in the late 1950s.

A native of the former Yugoslavia, Panic defected from the communist country during a bicycle race. He started ICN with $200 and a washing machine as a centrifuge.

As chief executive, Panic went on to grow ICN into a midsize drug maker and was known for his autocratic rule, shareholder and board clashes and sexual harassment lawsuits.

In 2001, Panic lost a bitter proxy battle with dissident investors looking to overhaul ICN’s board and business.

Panic left the company in 2002.

New directors and executives renamed ICN as Valeant and set out to streamline the company, with mixed success.

Former Chief Executive Tim Tyson came under fire from Wall Street for a lack of growth and direction and left in 2008.

Pearson, a former executive at turnaround consultant McKinsey & Co., replaced Tyson two years ago.

Early cost cutting, small acquisitions and a focus on niches have won Pearson praise from analysts and investors.

Valeant’s shares are up some 45% so far this year with a market value of about $3.5 billion. The shares rose 40% in 2009.

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