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Valeant And Biovail Agree To Merge

Valeant (NYSE: VRX) and Biovail (NYSE/TSX: BVF) today announced that both companies’ Boards of Directors have unanimously approved a definitive merger agreement under which the companies would combine to generate enhanced value for stockholders. The combined company will be called Valeant Pharmaceuticals International, Inc. (“the new Valeant”).

Valeant and Biovail believe the new Valeant’s scale, financial strength and complementary product lines will enable it to pursue substantial growth opportunities. The combined company will have a significantly expanded presence in North America and operations in eight other countries, working across four growth platforms. The new Valeant will be able to leverage its complementary product lines and operations in specialty Central Nervous System (CNS), Dermatology, Canada and emerging markets/branded generics. In addition, the combined company will have limited patent exposure and enjoy strong and stable cash flows from legacy products that will support future growth. The new Valeant, on a 12-month trailing basis as of March 31, 2010, would have experienced double-digit revenue growth.

Under the terms of the agreement, Valeant stockholders will receive a one-time special cash dividend of $16.77 per share immediately prior to closing of the merger and 1.7809 shares of Biovail common stock upon closing of the merger in exchange for each share of Valeant common stock they own. The transaction is intended to qualify as a tax-free reorganization for Valeant stockholders. Upon the completion of the merger, which is expected to occur before the end of the year, Biovail stockholders will own approximately 50.5 percent and Valeant stockholders will own approximately 49.5 percent of the shares of the combined company on a fully diluted basis. For Biovail stockholders, this transaction represents a 15 percent premium based on a calculation of the stock prices over the last 10 trading days. It is anticipated that by December 31, 2010, contingent upon the closing of the merger and subject to approval by the new Valeant’s Board of Directors and to applicable law, the combined company will pay an additional one-time $1.00 per share dividend to all stockholders of the new combined entity, after which the new Valeant does not intend to pay dividends. To finance the transaction, the companies have secured a commitment of $2.8 billion through a term loan facility provided by Goldman Sachs Bank USA, Morgan Stanley & Co. Incorporated, and Jefferies & Company, Inc. Existing Valeant 7.625% and 8.375% senior unsecured notes will be refinanced as part of the transaction.

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