Valeant Pharmaceuticals (VRX) Asks Banks to Help Review its Options

Valeant Pharmaceuticals

Valeant Pharmaceuticals (NYSE:VRX) TSE:VRX) sought the help of investment banks to review its options after buyout firms and other companies expressed interests on some of its businesses, according to Reuters based on information from people familiar with the situation.

According to the sources, the Canadian pharmaceutical company hired Goldman Sachs Group (NYSE:GS) and Centerview Partners Holdings as financial advisors while weighing its strategic options.

Valeant CEO Michael Pearson and Board member Bill Ackman, who is also the CEO of Pershing Square Capital Management, recently stated that the pharmaceutical company was considering selling some of its non-core assets to reduce its $30 billion debt, restore its value, and stabilize its financial position.

The stock price of Valeant dropped from its highest trading price of $263.81 per share to as low as $25.27 per share over the past 52 weeks. The stock closed $32.37 per share, down by 2.21% on Thursday, April 14.  The company lost more than 68% of stock value year-to-date based on data from Google Finance.

Valeant assets attractive to buyers

Potential buyers are interested to acquire Valeant’s Xifaxin, a treatment for irritable bowel syndrome and the best-selling product in its gastrointestinal division. The product was part of its $11 billion acquisition of Salix Pharmaceuticals last year.

Aside from Xifaxin, the buyers are also targeting its skin care products including CeraVe, Obagi, and Solta.

Valeant receives notice of default

S&P and Moody’s downgraded the company’s credit rating, and it also received a notice of default from bondholders due to the filing of its Form 10-K annual report

The Canadian pharmaceutical company said it “working diligently and it is on schedule to file its Form 10-K on or before April 29, 2016.”  The company explained that the notice of default will not accelerate any of its indebtedness.

Last month, Valeant revamped its leadership and it is currently searching a new CEO to replace Pearson. Ackman, who recently joined the company’s Board, expressed confidence that a new CEO would be appointed sooner.

The Senate Committee on Aging subpoenaed Pearson to participate in its hearing regarding drug pricing on April 27. The company’s Board said requested Pearson to cooperate with the Committee. Pearson in engaged in an ongoing dialogue with the Committee regarding his deposition.