BVF Biovail Corp

Two top California government officials are adding their dissenting voices to the proposed merger of Canada's Biovail Corp. (BVF) and California-based Valeant Pharmaceuticals International (VRX), calling on regulators to investigate the deal's lawfulness.

Darrel Steinberg, president of the California State Senate, and John Perez, speaker of the California State Assembly, have co-signed a letter to the U.S. Securities and Exchange Commission and the Department of Justice requesting that the regulators probe the pending merger.

The letter, which was viewed by Dow Jones, says the merger contemplates 1,000 layoffs and that they're concerned the bulk will be borne by Valeant, which is based in a state that already has 2 million people unemployed.

"As policymakers, we are doing all we can to enact policies that expand job creation in the state now," the letter says. "We are very concerned that this merger may run counter to that policy objective."

Previously this week, California Assembly Members Kevin de Leon and Jared Huffman raised concerns about the newly merged company's potential to avoid paying taxes and resulting job losses in California in separate letters to the SEC and DOJ.

In addition, de Leon and Huffman noted a potential conflict in that the same bankers that provided fairness opinions to Biovail and Valeant also financed new debt Valeant is taking on as part of the terms of the merger.

The combination is expected to be a reality by Tuesday, following shareholder votes scheduled to be held by each company the day before.

Biovail and Valeant have said they expect 25% of their combined North American workforce to be cut but haven't given a specific number for each company. The newly formed company, which will keep the Valeant name, has forecast reducing costs by $300 million by the end of 2012.

Biovail (NYSE:BVF)
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