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5 Dumbest Things on Wall Street This Week: April 12

5. Valeant Bags Obagi

Pity all those fast money players that poured into Obagi Medical Products (OMPI). They were betting on a bidding war, but got left holding the bag instead.

Shares of the skincare products purveyor plummeted nearly 6% Monday to $23.98, after Germany's Merz Pharma Group yanked its offer for the company. Merz offered $22 a share for Obagi last Tuesday, topping Canada's Valeant Pharmaceuticals (VRX) mid-March bid of $19.75. Valeant came back swinging last Wednesday with a $24 proposal, which caused traders to drive the stock even higher in anticipation of a showdown. Obagi closed at $25.42 last Friday, well above Valeant's revised price, before Merz surrendered Monday and sent the stock lower.

"Merz is a disciplined buyer and at this level the economics of such a transaction do not meet our requirements," said Merz CEO Philip Burchard in a statement.

Wow! Now there's something you don't see too often on Wall Street. A CEO zipping up his fly rather than engage in a pissing match. Boy did he make all those chest-thumping traders angling for a price fight look foolish!

As for Valeant, well, it certainly needed the win, even if it was forced to sweeten the pot. The company's stock got shellacked last week over Mylan's (MYL) introduction of a new generic version of its herpes cream Zovirax. Valeant CEO J. Michael Pearson said Mylan's maneuver would hit the company's 2013 earnings, although he would not reveal the extent until it reports quarterly results in May.

Pearson did hint that the Obagi purchase might "mitigate the impact" of its Zovirax zinging. Nevertheless, the fact that Valeant was forced to spend $417 million for Obagi instead of $344 million -- thanks to Merz's meddling -- must be making him feel as bruised as one of those asinine armchair arbitrageurs right now.
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