Valeant Surges Ahead With $10.96B Bid For Salix Pharma, Outpacing Endo
Valeant wins Salix bid with $10.96B offer, outbidding Endo; stock rises, strategic growth achieved.
Breaking News
Jul 08, 2024
Mrudula Kulkarni

Valeant Pharmaceuticals International Inc has upped its bid
for Salix Pharmaceuticals Inc to $10.96 billion (7.42 billion pounds) in cash,
outbidding Endo International Plc, the sole other bidder for the
gastrointestinal drug maker. Salix has accepted Valeant's revised offer of $173
per share in cash, an increase from Valeant's previous bid of $158 per share
last month, as stated in a joint announcement by both companies.
This acquisition marks Valeant's largest to date,
underscoring its strategy of growth through acquisitions and operational
efficiencies. For Valeant Chief Executive Michael Pearson, whose previous bid
for Allergan Inc fell through last year, this deal represents a significant
opportunity for redemption. Investor Bill Ackman, who recently disclosed a more
than $3 billion stake in Valeant, stands to benefit from this transaction
following his involvement in the failed Allergan bid.
However, despite its advantages, Valeant's acquisition of
Salix comes with significant financial implications. Salix, which faced
challenges last year due to higher-than-expected drug supplies leading to a cut
in earnings forecasts, became the subject of a brief bidding war. Valeant's
CEO, Michael Pearson, found himself competing against his former protégé,
Endo's Rajiv De Silva, formerly of Valeant.
Following Valeant's revised offer, Salix's stock rose by 2%,
reaching $172.75 on the Nasdaq, boosting Valeant's U.S.-listed shares by 2.5%
to $202.34. Meanwhile, Endo's shares climbed 2.7% to $89.65 after announcing
its withdrawal from the bidding process, citing alternative strategic
priorities including potential deals and R&D initiatives.
Endo had initially proposed a $175 per share deal for Salix,
but Valeant's enhanced offer, primarily in cash, valued Salix higher. The
transaction, set to close on April 1, involves Valeant's $1.45 billion share
offering, supplemented by borrowed funds and existing cash reserves, without
additional debt issuance according to IFR sources. Valeant estimates the deal
will confer an enterprise value of approximately $15.8 billion upon Salix.