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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check appropriate box:
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Preliminary Proxy Statement |
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material pursuant to §240.14a-12 |
VALEANT PHARMACEUTICALS INTERNATIONAL
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form or schedule and the date of its
filing. |
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EXPLANATORY NOTE
The following is a copy of the communication sent by J. Michael Pearson, Chairman and Chief
Executive Officer of Valeant Pharmaceuticals International
(Valeant), to employees of Valeant and
Biovail Corporation (Biovail) on July 28, 2010 relating to the Agreement and Plan of Merger,
dated as of June 20, 2010, among Valeant, Biovail, Biovail Americas Corp. and Beach Merger Corp.
Dear Colleagues,
Five weeks ago we announced a merger agreement between Valeant and Biovail to create a new leading
specialty pharmaceuticals company. The New Valeant Pharmaceuticals International, Inc. will be
well positioned to continue its combined strategy of growth, continuing to utilize a new business
model based on a lean cost structure and a decentralized management approach focused on multiple
specialty segments (both therapeutic areas and geographies), and using business development as our
primary growth engine.
A Growth Company
By combining Biovails corporate structure, both companies strong and growing Canadian businesses,
Biovails specialty CNS focus, and Valeants established businesses in Dermatology, Neurology,
Central Europe, Mexico, Brazil, and Australia, the new company will have multiple growth platforms.
Together, our expectation is that we will do a much better job serving patients, physicians and
distribution partners, and providing opportunities to our combined employee base. I have had the
opportunity to visit a number of sites since the announcement Mississauga, Bridgewater,
Barbados, Princeton (Aton), Aliso Viejo, and Montreal and I know many of you recognize the
compelling business logic of this move. I will continue to visit as many of the remaining sites as
possible over the next few weeks.
Market Response
The initial response from the market has been positive. Biovails shares are up over 40% and
Valeants shares are up over 20% to date since the merger agreement was announced. The difference
in relative share price performance is a function of the 15% premium to Biovail shareholders
implied by the 1.7809 exchange ratio and the special dividend of $16.77 per share that Valeant
stockholders will receive the day before the closing of the merger. Both stocks should continue to
move in tandem until the companies combine. I have talked to all of the major investors of both
companies and, almost without exception, they are delighted by the strategic move and the prospects
for the new company.
The Task at Hand
Expectations for the new Valeant are already high, and as you get to know me, you will find I am
not satisfied with anything less than surpassing expectations.
Our first task together is to develop a plan for the new company how we will integrate the two
organizations into a single, more powerful, more diversified, and more resilient company without
losing the speed of decision making and entrepreneurial spirit that I know both companies are proud
of. My commitment to all of you is that we will make decisions quickly, in a fact-based way, and
we will treat all employees affected by the integration fairly and with respect. My objective is
to have the companies fully integrated promptly following the closing of the transaction and by the
end of 2010, so we can give our full attention to growth in 2011.
Integration Planning Process
I met with the leadership teams of both companies in Barbados two weeks ago and we have kicked off
the integration planning process. Integration planning will be carried out by a joint steering
committee that I will chair comprised of Gilbert Godin, Peggy Mulligan, Greg Gubitz, Mark Durham,
Peter Blott, Steve Min, Bhaskar Chaudhuri, Elisa Karlson, and Rajiv De Silva. We have identified
12 integration work streams which will each be led by one of the Steering Committee members. They
are as follows:
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Workstream |
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Team Lead |
Corporate *
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Peggy Mulligan, SVP & CFO, Biovail |
Canada Commercial *
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Gilbert Godin, EVP & COO, Biovail |
US Commercial *
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Rajiv De Silva, COO Specialty Pharmaceuticals, Valeant |
Research &
Development *
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Rajiv De Silva, COO Specialty Pharmaceuticals, Valeant |
Manufacturing
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Gilbert Godin, EVP & COO, Biovail |
Tax
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Peggy Mulligan, SVP & CFO, Biovail |
Communications/Talent/
HR
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Mark Durham, SVP Human Resources & Shared Services,
Biovail |
Vision & Values
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Elisa Karlson, EVP & CAO, Valeant |
Facilities
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Elisa Karlson, EVP & CAO, Valeant |
Deal Close
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Steve Min, EVP General Counsel & Corporate Secretary,
Valeant
Greg Gubitz, SVP Corporate Development & General
Counsel, Biovail |
Financial Baselining *
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Peggy Mulligan, SVP & CFO, Biovail |
Business Development
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Greg Gubitz, SVP Corporate Development & General
Counsel, Biovail |
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indicates support of McKinsey & Co. |
We have engaged McKinsey & Co. to help us on five of the workstreams (Corporate, Canada Commercial,
US Commercial, R&D and Financial Baselining). In addition, I have asked Ryan Weldon, Valeant VP
Neurology, to play a day-to-day role supporting me across all teams. Many of you will be asked to
join one or more of these teams.
The integration planning process is designed to be thorough, but keeping with the shared success of
both companies, it is also designed to be quick. We expect the merger
to be completed before the end of the year, and we need to be ready to operate as a single entity as soon
as the merger closes.
Timing of Decisions
We have already made a number of important decisions.
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Our operations in Australia, Central Europe, Latin America and Petaluma will be
largely unaffected by this integration. |
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The New Valeant will be headquartered in Mississauga and we will retain the
efficiencies of Biovails corporate structure. |
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The U.S. Operation will be largely consolidated into a new location. |
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I will select the members of the combined companys new Executive team before the end
of the summer Peggy Mulligan would be the new CFO of the combined company as Peter
Blott plans to retire; we will lose a great colleague and good friend when Peter retires.
At the same time, I am delighted that Peggy will be joining my new team and have already
been impressed by her sharp intellect and commitment. It is important that all Valeant
employees understand Peter will continue in his role as Valeant CFO until the deal closes. |
Ongoing Business
While many of us will be spending time working on integration planning over the next few
months, it is critical that we all recognize that, until the merger closes, we must continue to
operate as two separate companies. As always, our primary responsibility is to continue to
perform in our day-to-day jobs.
I do realize that change, while exciting, is also difficult and stressful. I have been clear
from the day of the announcement that we do intend to capture at least $175M in cost synergies
(and my stretch target is substantially higher) and expect approximately 15% of the combined
work force to lose their jobs as a result of this coordination and at the most senior levels
of the company this percentage will be even higher. So, the next few months will be difficult
for everyone including your bosses and I thank you in advance for your professionalism
and understanding.
Again, my commitment to you is a quick but fair integration planning process with clear
decision making. And, as soon as possible, a shift back to growth and value creation.
Should you have any questions regarding this correspondence or the integration planning
process, please contact your respective Human Resources department.
I appreciate your support and understanding, and I look forward to leading the new Valeant on
its next exciting chapter.
Best regards,
Mike
Caution Regarding Forward-Looking Information and Safe Harbor Statement
To the extent any statements made in this document contain information that is not historical,
these statements are forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
may be forward-looking information as defined under applicable Canadian securities legislation
(collectively, forward-looking statements).
These forward-looking statements relate to, among other things, the expected benefits of the
proposed merger such as efficiencies, cost savings, tax benefits, enhanced revenues and cash flow,
growth potential, market profile and financial strength; the competitive ability and position of
the combined company; the expected timing of the completion of the transaction; and the expected
payment of a one-time cash dividend. Forward-looking statements can generally be identified by the
use of words such as believe, anticipate, expect, estimate, intend, continue, plan,
project, will, may, should, could, would, target, potential and other similar
expressions. In addition, any statements that refer to expectations, projections or other
characterizations of future events or circumstances are forward-looking statements. Although
certain of these statements set out herein are indicated above, all of the statements in this
letter that contain forward-looking statements are qualified by these cautionary statements.
Although Valeant and Biovail believe that the expectations reflected in such forward-looking
statements are reasonable, such statements involve risks and uncertainties, and undue reliance
should not be placed on such statements. Certain material factors or assumptions are applied in
making forward-looking statements, including, but not limited to, factors and assumptions regarding
the items outlined above. Actual results may differ materially from those expressed or implied in
such statements. Important factors that could cause actual results to differ materially from these
expectations include, among other things, the following: the failure to receive, on a timely basis
or otherwise, the required approvals by Valeant and Biovail shareholders and government or
regulatory agencies (including the terms of such approvals); the risk that a condition to closing
of the merger may not be satisfied; the possibility that the anticipated benefits and synergies
from the proposed merger cannot be fully realized or may take longer to realize than expected; the
possibility that costs or difficulties related to the integration of Valeant and Biovail operations
will be greater than expected; the ability of the combined company to retain and hire key personnel
and maintain relationships with customers, suppliers or other business partners; the impact of
legislative, regulatory, competitive and technological changes; the risk that the credit ratings of
the combined company may be different from what the companies expect; and other risk factors
relating to the pharmaceutical industry, as detailed from time to time in each of Valeants and
Biovails reports filed with the Securities and Exchange Commission (SEC) and, in Biovails case,
the Canadian Securities Administrators (CSA). There can be no assurance that the proposed merger
will in fact be consummated.
Additional information about these factors and about the material factors or assumptions underlying
such forward-looking statements may be found in the body of this letter, as well as under Item 1.A.
in each of Valeants and Biovails Annual Report on Form 10-K for the fiscal year ended December
31, 2009, and Item 1.A in each of Valeants and Biovails most recent Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2010. Valeant and Biovail caution that the foregoing list
of important factors that may affect future results is not exhaustive. When relying on
forward-looking statements to make decisions with respect to Valeant and Biovail, investors and
others should carefully consider the foregoing factors and other uncertainties and potential
events. Neither Biovail nor Valeant undertakes any obligation to update or revise any
forward-looking statement, except as may be required by law.
Additional Information
In connection with the proposed merger, Biovail has filed with the SEC a Registration Statement on
Form S-4 that includes a preliminary joint proxy statement of Valeant and Biovail that also
constitutes a prospectus of Biovail. Valeant and Biovail will mail the definitive joint proxy
statement/prospectus to their respective shareholders. INVESTORS ARE URGED TO READ THE PRELIMINARY
JOINT PROXY STATEMENT/PROSPECTUS AND THE DEFINITIVE VERSION THEREOF WHEN IT BECOMES AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors may
obtain the preliminary joint proxy statement/prospectus and the definitive version thereof when it
becomes available, as well as other filings containing information about Valeant and Biovail, free
of charge, at the website maintained by the SEC at www.sec.gov and, in Biovails case, on SEDAR at
www.sedar.com. Investors may also obtain these documents, free of charge, from Valeants website
(www.valeant.com) under the tab Investor Relations and then under the heading SEC Filings, or
by directing a request to Valeant, One Enterprise, Aliso Viejo, California, 92656, Attention:
Corporate Secretary. Investors may also obtain these documents, free of charge, from Biovails
website (www.biovail.com) under the tab Investor Relations and then under the heading Regulatory
Filings and then under the item Current SEC Filings, or by directing a request to Biovail, 7150
Mississauga Road, Mississauga, Ontario, Canada, L5N 8M5, Attention: Corporate Secretary.
The respective directors and executive officers of Valeant and Biovail and other persons may be
deemed to be participants in the solicitation of proxies in respect of the proposed transaction.
Information regarding Valeants directors and executive officers is available in its Annual Report
on Form 10-K for the fiscal year ended December 31, 2009, which was filed with the SEC on February
24, 2010, and in its definitive proxy statement filed with the SEC by Valeant on March 25, 2010.
Information regarding Biovails directors and executive officers is available in its Annual Report
on Form 10-K for the fiscal year ended December 31, 2009, which was filed with the SEC on February
26, 2010, and in its definitive proxy statement filed with the SEC and CSA by Biovail on April 21,
2010. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the
preliminary joint proxy statement/prospectus filed with the SEC.
These documents can be obtained
free of charge from the sources indicated above. Other information regarding the interests of the
participants in the proxy solicitation will be included in the joint proxy statement/prospectus and
other relevant materials to be filed with the SEC and the CSA when they become available. This
communication shall not constitute an offer to sell or the solicitation of an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. No offer of securities shall be
made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act
of 1933, as amended.