Investors are on tenterhooks for the potentially imminent launch of a pair of initial public offerings in Bausch Health Co.’s eye-care and skin-care units. But tens of billions of dollars in debt left over from its days as Valeant Pharmaceuticals remain a big question mark.

“There are people who were burned by the old Valeant deal, so there’s kind of a shadow hanging over it still,” said Jim Osman, founder of The Edge Consulting Group — a research firm that specializes in spinoffs. At the same time, “there’s an overhang of value about it,” he said.

Despite the Valeant stigma, analysts at The Edge say investors should buy shares of the parent in advance of the separations. They believe the presence of big-name holders like Icahn Enterprises and GoldenTree Asset Management indicate that some value will be created through the transactions. “On one hand you see the amount of bad news and the depressed stock price; but on the other hand, you have quality management and shareholders,” Osman said. “It’s set up to be one of the greatest three-way splits ever in terms of valuation.”

Continue reading the full article…