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Valeant (VRX) To Buy Solta Medical (SLTM) For $236 Million in Cash

Stocks in this article: SLTMVRX

NEW YORK (TheStreet) -- Valeant Pharmaceuticals  (VRX) announced today that will acquire Solta Medical (SLTM) for about $236 million in cash.

The deal will see Valeant purchase all common stock of Solta for $2.92 per share, a 40% premium over the medical technology company's closing price on Dec. 13. The deal is expected to close sometime in the first quarter of 2014, pending regulatory approval.

Solta stock is up 40% to $2.92 following the news. The acquisition comes a month after Solta announced it had retained Piper Jaffray as an adviser for a potential sale due to falling profits.

Valeant stock is currently up 3% to $110.04.

TheStreet Ratings team rates SOLTA MEDICAL INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate SOLTA MEDICAL INC (SLTM) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 122.4% when compared to the same quarter one year prior, rising from -$2.88 million to $0.64 million.
  • SOLTA MEDICAL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SOLTA MEDICAL INC reported poor results of -$0.61 versus -$0.02 in the prior year. This year, the market expects an improvement in earnings (-$0.03 versus -$0.61).
  • Net operating cash flow has significantly decreased to -$1.24 million or 232.23% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • SLTM has underperformed the S&P 500 Index, declining 21.00% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • You can view the full analysis from the report here: SLTM Ratings Report

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