Valeant Pharma: Thoughts on potential VRX merger with AGN - FBR Capital
FBR Capital views the merger proposed by Valeant with Allergan (AGN-Not Rated) as accomplishing several important strategic goals. First, Valeant's aesthetics franchise could be expanded and enhanced by the additional product offerings. Second, by virtue of synergy capture, they estimate that the merger could be potentially accretive beginning in 2015. Third, Valeant's mgmt has commented that delevering could be accomplished via a merger with a relatively unlevered co and they believe Allergan fits that profile. As to the likelihood that another bidder might emerge, they believe Valeant's willingness to jettison development programs and to recognize operational synergies might position the co well against potential competition.
VRX is +10% and AGN is +18% at a new all time high in the premarket on reports of a potential deal.