Medicis to Acquire Inamed

Santa Barbara-based Inamed Corp., one of only two makers of breast implants in the U.S., said Monday that it had agreed to be acquired by skin products manufacturer Medicis Pharmaceutical Corp. for about $2.6 billion in cash and stock.

The purchase by Scottsdale, Ariz.-based Medicis, if approved by federal regulators, would create one of the nation’s largest cosmetic treatment firms.

What’s more, it would position the combined company to take advantage of a burgeoning market for both vanity and required surgical procedures.

“This will create a one-stop shop for dermatologists and plastic surgeons for facial aesthetics and breast implants,” said Julie Schumacher Hoggatt, a medical technology analyst at Hibernia Southcoast Capital.

The company, which would retain the Medicis name, would have annual revenue of about $700 million and about 1,500 employees.

It would develop and manufacture a wide range of products, including prescription drugs for wrinkles, acne and psoriasis; devices to treat obesity; and implants for breast enlargements.

“Joining forces with Inamed gives us the ability to offer our primary customers -- plastic surgeons, cosmetic surgeons and dermatologists -- a broader array of complementary, highly effective products to meet patients’ needs,” said Jonah Shacknai, chairman and chief executive of Medicis. He is expected to retain both titles at the new company.

Shacknai said that Medicis would remain headquartered in Scottsdale, but that it should retain a “strong presence” in Santa Barbara and Fremont, Calif., where Inamed has facilities. Inamed has about 1,100 on its payroll, mostly in sales.

Medicis is offering 1.4205 of its shares and $30 in cash for each Inamed share held.

The offer valued Inamed at $71.35 a share based on Medicis’ closing stock price of $29.11 on Monday. Medicis shares, traded on the New York Stock Exchange, fell $2.57 for the day as some investors reacted negatively to the bid.

Inamed shares, by contrast, rose $1.97 to $68.21 on Nasdaq. Inamed stock has rocketed since 2002 and in February hit a record closing high of $72.08.

Inamed manufactures a number of healthcare products, including collagen to correct wrinkles and a stomach balloon device used to treat obesity.

But the company is best known for breast implants. Inamed and its cross-town rival, Mentor Corp., are the only suppliers of breast implants in the U.S., and the $200-million domestic market is split evenly between them. About 57% of Inamed’s sales last year came from breast implants.

Inamed started 25 years ago as a maker of silicone gel implants. But the Food and Drug Administration banned silicone implants in 1992 for general use because of safety concerns.

Reports linked silicone implants to chronic diseases such as lupus, rheumatoid arthritis and other immune disorders. A barrage of lawsuits was settled for more than $3 billion in 1999, but not before the largest implant company, Dow Corning Corp., filed for bankruptcy protection. Inamed’s share of the settlement totaled $31.5 million.

Inamed now makes both saline and silicone implants. The silicone products are sold in Europe and in the U.S. to breast cancer patients requiring reconstructive surgery.

Next month the FDA is scheduled to consider for the second time Inamed’s bid to win approval to market a new type of silicone gel breast implant known as cohesive gel impact. The company said it was less likely to leak or rupture than earlier products.

The number of women who underwent breast augmentation grew to 334,000 in 2004, up 75% from 191,000 in 1999, according to the American Society for Aesthetic Plastic Surgery.

Nick Teti, Inamed’s chairman, told analysts Monday that the sale would help the company boost research efforts at a time when a huge part of the market -- baby boomers -- is aging.

“It will create a potentially tremendous value for our shareholders,” said Teti, who is set to become vice chairman of the combined company.

Times wire services were used in compiling this report.