Valeant wins Salix with sweetened $11B deal
Canadian drugmaker Valeant Pharmaceuticals International (VRX ) on Monday sweetened its agreed-upon deal to buy North Carolina-based Salix Pharmaceuticals (SLXP), boosting the price to $173 per share in cash, or roughly $11 billion.
The amended agreement successfully trumped last week's rival and unsolicited offer for Salix from Ireland-based healthcare company Endo International (ENDP). Endo withdrew its offer of a mix of cash and stock for Salix in a deal that had been valued at $11.2 billion.
Salix shares closed up 1.98% in Monday trading at $172.75. Valeant shares closed up 2.49% at $202.34. Endo shares closed up 2.66% at $89.65.
Salix has been a frequent subject for corporate suitors because the company features an array of treatments for gastrointestinal illnesses and procedures. Its product lineup includes Pepcid, used for short-term treatment of active duodenal ulcers.
Valeant's revised offer would provide $1 billion more in additional cash to Salix shareholders than the initial deal. The sweetened transaction represents a 9.49% increase over the $158 per share price in the original agreement reached in February, the companies said in a joint announcement.
If the minimum number of Salix investors tender their shares by March 31, Valeant said the companies expect to close the deal on April 1. If the conditions of the tender offer have not been satisfied by April 8, the offer price will revert to $158 per share.
In return for the higher offer, Salix agreed to a $100 million boost in the break-up fee it would owe to Valeant if the deal doesn't close, the companies said.
The higher break-up fee would have made it more costly for Endo to counter successfully with a higher offer. Endo's bid also required approval from the company's board of directors, which means it could have taken longer to complete.
The rival bidding for Salix is the latest development in a series of multi-million dollar acquisition proposals in the pharmaceutical sector during recent months.
"We continue to be very excited about the combination of our two companies and we are committed to getting this deal done," said J. Michael Pearson, Valeant's chairman and CEO. He said the revised offer "eliminating market and company risk," creates "significant shareholder value for Salix."
Thomas D'Alonzo, Salix's board chairman and acting CEO, said the company was "pleased that the enhanced offer price recognizes the value of Salix as the leading gastrointestinal specialty pharmaceutical company and delivers to our stockholders all cash consideration in the near future."
While saying it was disappointed with the outcome, Endo said in a statement that the company "will continue to be disciplined in our approach to potential acquisitions."