Valeant Pharmaceuticals International (VRX) Tuesday said it would sell three skin care brands to French cosmetics company L'Oréal for $1.3 billion in cash, the embattled drugmaker's latest effort to cut debt and strengthen the company's finances.
The tentative proposed sale, announced the day after Valeant announced similar plans for an $819.9 million cash sale of its Dendreon cancer unit to China conglomerate Sanpower Group, sent the company's shares up nearly 9% to $16.70 in morning trading.
The transactions represent the latest moves in Valeant CEO Joseph Papa's bid to cut the Montreal-based company's estimated $30 billion in debt and enable Valeant to rebound amid investigations about its drug-pricing and distribution policies, along with its accounting practices. The company's shares have lost more than 90% of their value since early August 2015.
Papa, who replaced former Valeant CEO J. Michael Pearson in May, said in a written statement that the company was "pleased to announce the progress we are making in reshaping our product portfolios and driving value for our shareholders."
The skin care products on the sale block include the CeraVe brand portfolios of cleansers, moisturizers, and ointments, along with the AcneFree and the AMBI product lines, which distribute treatments for acne, moisturizing, and other skin care, Valeant said.
The transaction is expected to close during the first quarter of 2017, subject to government regulatory approvals. Valeant said it will use the sale proceeds to repay term loan debt under the company's senior credit facility.
Valeant said it would use proceeds from the planned Dendreon sale for the same purpose. The unit's first and only commercialized product is Provenge, an immunotherapy vaccine for prostate cancer that gained U.S. Food and Drug Administration approval in April 2010, the company said.
The Dendreon deal is also expected to close in the first half of 2017, subject to regulatory approvals.
"With this sale, we are better aligning our product portfolio with Valeant's new operating strategy by exiting the urological oncology business, which is one of our non-core assets," Papa said in a statement about the Dendreon divestiture.