Canadian pharmaceutical giant Valeant Pharmaceuticals Intl Inc (NYSE:VRX) goes a step ahead in the sales of its strategic assets, as it agrees to sell Dendreon to Sanpower Group. One of the largest privately held conglomerates of China will pay $819.9 million to the Laval-based company, as decided in the terms of this deal.
Dendreon, a near bankrupt biotech firm was acquired by the $5.11 billion company for an agreed consideration of $296 million. The recent deal is good news for Valeant as it will be selling a non-core asset, which has not been aligned with its portfolio. CEO Joseph Papa expressed his optimism over the recent deal, as the company tries to strengthen its balance sheet. The proceeds from the sale will be used to repay the term loans debt for the company.
The transaction is expected to close in the first half of this year after completing all the formalities and obtaining regulatory approvals. The recent development may add to investor optimism, as they might opt to enjoy some gains after the announcement. The overall investor sentiment has been positive since the start of this year, as we’ve witnessed an uptrend. A glance at the options market also suggests that there is a willingness to buy the company’s shares, as investor interest for call options between $15-$17 is on the higher side.
That being said, short interest also remains on the higher side, with a 3% recent increase. The behavior of sell-side firms is also not as promising, as most of them have continued to reduce their price target. Smart Stock News expects an uptrend to follow after the recent deal, as it may erode investor concerns for a while. However, our long-term view on Valeant Pharmaceuticals is bearish.
Shares of Valeant closed higher in extended-hours trading at $15.40.