TORONTO
— The owner of the Ottawa Senators has weighed in against a planned mega-merger
involving the pharmaceutical company he founded, writing a strongly-worded open
letter warning of job losses on the eve of a shareholders meeting that could
determine if the deal goes ahead.

Eugene Melnyk said he felt “compelled” to
communicate his profound concerns about the acquisition of California-based
Valeant Pharmaceuticals International by Biovail Corp.

In his letter, sent to the CEO’s and boards of directors at Biovail
and Valeant, the U.S. Securities Commission and the U.S. Department of Justice,
Melnyk said the merger is a bad deal for Canadian and American taxpayers and
shareholders.

“Major banks… some the beneficiaries of billions of
tax dollars in American government bailouts, will now fund the billions of
dollars required for Valeant to exit the US and lay off thousands of American
and Canadian workers, ” he writes.

“As a result of this merger, many hardworking families
in the United States and Canada will
face tremendous hardship due to Valeant’s required layoffs,” he added.

On Sept. 7 Biovail shares jumped 10 per cent after Valeant
reported that a combination of the companies would save US$300 million, partly
through slashing 1,100 jobs, or 25 per cent of the combined workforce.

In the letter, made available to The Canadian Press, Melnyk
predicts shareholders will vote in favor of the proposed merger because of the
“short-term accretive nature of this deal and the demonstrated impact on
the share prices.”

But he said the result will be “a company without an
executable pipeline of pharmaceuticals to develop, market and improve the lives
of patients and the financial ability to honour the commitments the Management
and Board are making.”

“After the bonuses are paid, taxes are funnelled away,
executives scatter and business settles down, we will be left with the same
disappointing reality we face today,” he wrote.

Melnyk was chairman and CEO of Biovail but left in 2007
after the company was accused of accounting fraud. Biovail settled the
allegations by making payments to the Securities and Exchange Commission in the
U.S. and the Ontario
Securities Commission in Canada.

Melnyk said he bears some of the responsibility for the
current state of the company, noting he selected key leaders who turned out to
be disappointments.

“I retired too early,” said Melnyk, who is based
in Barbados.

Melnyk accused the current management at Biovail of failing
to bring a single drug to market in the last six years.

The successful businessman was ranked the 70th richest
person in Canada
last year by Canadian Business magazine.

The US$3.2 billion share swap transaction between the two
companies was announced in June.

Both Biovail and Valeant are holding special shareholders
meetings on Monday to vote on the proposed merger.