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Acquisition-hungry drug maker Valeant Pharmaceuticals has Allergan in its sights.

Ryan Remiorz/THE CANADIAN PRESS

Don't be discouraged if you have trouble determining Valeant Pharmaceuticals International Inc.'s true value. The drug maker's acquisition pace makes it almost impossible to peg.

Since Valeant tied up with Biovail Corp. in 2010, the company has embarked on an ambitious acquisition spree, striking 21 deals worth more than $14-billion in a little over three years. Every time shareholders get a chance to catch a breather and assess the future, management goes hunting again. Now the executive team wants to team up with Bill Ackman on a brand new $47-billion deal.

Let's be clear: shareholders aren't angry about the acquisition strategy. Since the start of 2011, the drug maker's stock is up more than 400 per cent, and the latest news about bidding for Allergan Inc. sent the shares 7 per cent higher – though that's small change now, considering how far they have already come.

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But here's the real question: Have the shares jumped out of line with actual earnings growth? When you go on a buying spree, investors can get ahead of themselves because they get excited at the prospect of future growth. What really matters, though, is how things come together once the acquisitions are integrated into the parent company.

That very issue is something The Globe and Mail's Sean Silcoff raised in an Report on Business Magazine story about Valeant and its intense acquisition ambitions.

Rating agency Moody's Investors Service also raised another caution flag in a note on Monday: "The company's rapid pace of acquisitions makes it difficult to ascertain a true run-rate of pro forma EBITDA (earnings before interest, taxes, depreciation and amortization.)"

Consider this: Despite the company's soaring stock price, Valeant actually lost $866-million last year. Much of that stems from a heavy interest expense on its $17-billion worth of debt. But even before those interest costs are factored in, the company posted an operating loss of $410-million.

Valeant's debt is largely tied to its acquisition strategy, and the company plans to borrow $15.5-billion (U.S.) more to fund the Allergen acquisition. To get a sense of where the existing leverage comes from, here's a rundown of the company's largest deals to date:

2013: $8.7-billion acquisition of Bausch & Lomb

2012: $2.6-billion acquisition of Medicis Pharmaceutical

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2011: $625-million (Australian) acquisition of iNova Pharmaceuticals

2012: $426-million (Canadian) acquisition of OraPharma

The company has also swung for the fences with two billion-dollar bids that ultimately fell through. In 2013, Valeant was willing to pay more than $13-billion for Actavis, and in 2011, it made a $5.7-billion hostile bid for Cephalon.

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