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Valeant raises offer for Salix; rival Endo bows out

Has increased bid to $173 per share in cash

Valeant Pharma logo 

Valeant has raised its offer for specialty pharma manufacturer Salix after its earlier bid was trumped by Ireland-based Endo.

Canadian Valeant hiked its bid to $173 per share in cash – almost matching the deal laid on the table by Endo last week and valuing Salix at a little over $11bn, an increase of around $1bn on its earlier offer.

Endo tabled a cash-and-stock deal for Salix, consisting of $45 in cash plus shares which boosted the offer to a value of around $175, but had no interest in entering into a renewed bidding war and said it was withdrawing its offer. 

In a statement, Endo said it will “continue to be disciplined in our approach to potential acquisitions.”

Valeant has asked for concessions with its raised bid however, giving Salix until April 7 to accept the new terms, after which it will revert to its earlier $158 per share offer. The new deal looks almost certain to go ahead given that Salix' board of directors has recommended it to shareholders.

The Canadian company is banking on the future success of Salix' traveller's diarrhoea and hepatic encephalopathy therapy Xifaxan (rifaximin), which is in the final stages of FDA review for the new indication of diarrhoea caused by irritable bowel syndrome.

The FDA is due to deliver its verdict on Xifaxan in IBS on May 27, and Salix has previously indicated this could provide a significant boost to the $750m in revenues it booked for the drug last year. Analysts have suggested Xifaxan could eventually become a $2bn product, potentially more if Valeant adopts an aggressive pricing policy for the drug.

Valeant's takeover comes after a period in which Salix has been at the centre of its own M&A storm, having tried and failed to acquire Cosmo Pharmaceuticals and assessed as a takeover prospect by Allergan, which eventually decided to link up instead with Actavis.

The US company has also had to deal with the embarrassment of admitting that impressively high sales figures in 2014 had been artificially inflated by overstocking at wholesalers. 

Article by
Phil Taylor

18th March 2015

From: Sales

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