Valeant Boosts Price for Obagi to $420 Million, Besting Merz Offer

   By Ben Fox Rubin 
 

Valeant Pharmaceuticals International Inc. (VRX, VRX.T) agreed to raise its offer for Obagi Medical Products Inc. (OMPI) by 22%, besting Merz Pharma Group's recently disclosed bid for the specialty pharmaceutical company.

Valeant now will pay $24 in cash for each Obagi share, boosting its acquisition price to about $420 million from $345 million.

Obagi shares again rose sharply amid the acquisition activity, jumping 8.8% premarket to $24.90 as investors seem to expect the bidding war may not be over. As of Tuesday's close, the stock was up 68% since the start of the year.

Valeant agreed to buy Obagi in late March, though Merz on Tuesday publicly disclosed a $22-a-share cash offer, or $385 million, saying it wanted stockholders to have an opportunity to benefit from its "superior proposal." Merz said it had been engaged in discussions with Obagi on a potential combination and wasn't made aware that Obagi was considering signing another deal.

Obagi later Tuesday responded by saying its board will evaluate Merz's offer, noting "time is of the essence in this matter."

A Merz representative wasn't immediately available for comment Wednesday morning.

Obagi, a specialty pharmaceutical company, develops proprietary topical aesthetic and therapeutic prescription-strength skin-care systems, which generated about $120 million in revenue last year.

Valeant and Merz develop a range of pharmaceutical products in dermatology and neurology.

Valeant's shares closed Tuesday at $75.37 and were inactive premarket.

Write to Ben Fox Rubin at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires