Valeant raises offer for Salix to $11.1 billion

BUSINESS

Valeant raises offer for Salix to $11.1 billion

Ross Marowits The Canadian Press
Published Monday, March 16, 2015 9:05AM EDT Last Updated Monday, March 16, 2015 10:48AM EDT

The head office and logo of Valeant Pharmaceutical are pictured in Montreal on Monday May 27, 2013. (Ryan Remiorz /The Canadian Press)

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MONTREAL -- Valeant Pharmaceuticals International Inc. raised its offer for Salix Pharmaceuticals by US$1 billion on Monday, pushing out rival Endo International which withdrew its bid for the company in the face of the US$11.1-billion deal.

The new friendly offer for the North Carolina-based company is US$173 in cash per Salix share, up from the US$158 per share Valeant had offered earlier. Endo's bid was valued about US$175 in stock and cash.

The companies say Valeant's new offer valued Salix at about US$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 US$158 per share if conditions of the offer have not been satisfied by April 8. The break fee has been increased by US$100 million to US$456 million plus fees.

Valeant (TSX:VRX) said the largest acquisition in its history will contribute modestly to its 2015 cash earnings per share, but projects a 20 per cent 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 with diarrhea.

Salix chairman and acting CEO 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.

On the Toronto Stock Exchange, Valeant's shares gained $6.71 or 2.66 per cent at $259 in Monday morning trading. Salix and Endo shares were each up about two per cent on Nasdaq.