Canada’s Valeant Pharmaceuticals will buy global eye health company Bausch + Lomb Holdings for $8.7bn in its biggest acquisition deal to date.

Valeant will pay aggregate consideration of $8.7bn billion in cash, of which $4.5bn will go to an investor group led by Warburg Pincus and approximately $4.2bn will be used to repay Bausch + Lomb’s outstanding debt.

The firm was on the verge of acquiring generics giant Actavis in April for $13bn, but both companies walked away from the deal when terms could not be agreed.

The new deal will see the end of Valeant’s aggressive acquisition policy, at least until the remainder of this year, Valeant chief executive Michael Pearson told Bloomberg.

The combined company is expected to have revenues of about $3.3bn in 2013, while Valeant expects to achieve at least $800m in annual cost savings by end of 2014.

Valeant’s existing ophthalmology businesses will be integrated into the Bausch + Lomb division, creating a global eye health platform with estimated 2013 net revenue of more than $3.5bn.

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The transaction will be financed with debt and approximately $2bn of new equity. Valeant has secured fully committed debt financing for the transaction from Goldman Sachs Bank USA.

In a statement, Pearson said; “We are excited to announce the acquisition of Bausch + Lomb, which will transform Valeant into a global leader in eye health by significantly strengthening our capabilities in ophthalmic pharmaceuticals, contact lenses and lens care products, and ophthalmic surgical devices and instruments.

“Bausch + Lomb’s world-renowned brand, comprehensive portfolio of leading eye care products, and promising late stage pipeline are an ideal strategic fit for our current ophthalmology business and we are strongly committed to continuing to build a sustainable eye health business. With this transaction, Valeant will be a worldwide leader in both dermatology and eye health.”

The deal, which is expected to close in the third quarter, is subject to customary closing conditions and regulatory approvals.

Image: Valeant’s existing ophthalmology businesses will be integrated into the Bausch + Lomb division, creating a global eye health platform. Photo: Courtesy of FreeDigitalPhotos.net.