Valeant wins Salix battle
Pharmaceuticals firm raises bid to $11.1B, knocks Endo out of the race
Valeant Pharmaceuticals International Inc. raised its offer for Salix Pharmaceuticals by $1 billion US on Monday, pushing out rival Endo International, which withdrew its bid for the company in the face of the $11.1-billion deal.
The new friendly offer for the North Carolina-based company is $173 in cash per Salix share; Valeant had earlier offered $158 per share. Endo’s bid was valued at about $175 US in stock and cash. The companies say Valeant’s new offer valued Salix at about $15.8 billion, including the debt that Valeant would assume.
In withdrawing its offer for Salix, Dublin-based Endo said it will pursue growth through other means.
“While we are disappointed with this outcome, we have been and will continue to be disciplined in our approach to potential acquisitions,” Endo said in a statement.
The apparent victory for Valeant comes several months after it came up short in its hostile bid for Botox-maker Allergan, which was eventually acquired by Actavis.
“This revised offer provides Salix shareholders with all-cash at a significant premium and the certainty to close by April 1,” Valeant CEO Michael Pearson said Monday.
The April 1 closing date assumes a minimum number of shares are tendered. However, the offer drops back to $158 per share if conditions of the offer have not been satisfied by April 8. The break fee has been increased by $100 million to $456 million plus fees.
Valeant said the largest acquisition in its history will contribute modestly to its 2015 cash earnings per share, but projects a 20-percent boost in 2016. The company is banking on the U.S. Food and Drug Administration granting approval for Xifaxan, a new Salix drug to treat irritable bowel syndrome.
Salix chairman Thomas D’Alonzo said Valeant’s revised offer recognizes the gastrointestinal company’s value. Analyst Neil Maruoka of Canaccord Genuity said Valeant’s all-cash offer provides more certainty for Salix shareholders and a faster close to the transaction.