Valeant Pharmaceuticals Intl Inc (VRX) is Expanding its Eye Care Business

Novartis AG (NYSE:NVS) is trading at around $74.40 per share, with the total market cap of $182.8 billion. The market values the company at around 11.52 times EV/EBITDA. Allergan, Inc. (NYSE:AGN) is a bit bigger than Valeant Pharmaceuticals Intl Inc (NYSE:VRX), with around $29 billion in its total market cap. The market values Allergan at around 15.5 times EV/EBITDA. Income investors might like Novartis the most with its high dividend yield of 3.4%. While the dividend yield of Allergan, Inc. (NYSE:AGN)is minimal at only 0.2%, Valeant has not paid any dividends for more than two years. After the deal, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) seems to be the most leveraged company among the three, with the net debt/EBITDA of 4.6. Novartis AG (NYSE:NVS) has a stronger financial foundation with net debt/EBITDA of only 0.42. Allergan has the strongest balance sheet with the net cash of around $85 million.

My Foolish take

The acquisition of Bausch + Lomb is quite a sensible move to expand its footprint in the ophthalmology field. The EV valuation of 12 does not seem to be an expensive price compared to the other players’ valuation. With the potential synergy with Bausch + Lomb and Michael Pearson’s leadership, I personally think that Valeant could become much stronger in the near future.

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