UPDATE: Valeant successfully fends off Endo, seals deal with Salix
- The Wall Street Journal reported last Wednesday that the scuffle to acquire Salix Pharmaceuticals is flaring up again, with Endo Pharmaceuticals making a bid for the company that exceeds Valeant's already-established offer. UPDATE: On Monday, CNBC reported that Valeant and Salix have arrived at a modified deal where Valeant will pay $173 per share for the company. Valeant raised its bid after Endo's last-minute attempt to poach the deal.
- Valeant and Salix agreed on a buyout deal last month in which the former company would acquire the latter for about $10.1 billion.
- In a letter to Salix, Endo offered the company about $175 per share (about $11 billion total) compared to Valeant's $158 per share bid—about a 10% bump in valuation. But Salix would have to pay a $356 million breakup penalty to Valeant if it chooses to accept Endo's bid, which raised questions about how successful Endo's poaching efforts will be. As of Monday, it looks like those questions have been answered.
Endo, along with Valeant and Shire, was always in the mix for acquiring Salix. But most observers considered the matter settled when Valeant and Salix struck a deal last month.
Enter Endo with a surprise poaching bid for the troubled company, which manufactures top-selling bowel drugs like Xifaxan. "We believe that time is of the essence, and we are prepared to engage immediately with the Salix Board and its advisors to undertake confirmatory due diligence and negotiate definitive transaction documentation," wrote Endo CEO Rajiv De Silva in a letter to Salix's board. "We and our advisors are ready to meet with you and your team at any time to discuss this proposal and to answer any questions you or they may have regarding our proposal."
But some remained skeptical that Salix would be willing to fork over the breakup fee to Valeant and take a risk with Endo. "We doubt Valeant will lose Salix" to the other company said one analyst to CNBC.
A Valeant spokesperson released the following statement regarding Endo's bid, emphasizing the certainty of the existing deal: "We are firmly committed to our all-cash agreed transaction, which delivers immediate and certain value to Salix shareholders." Endo's bid was obviously enough to scare Valeant into quickly raising its offer for Salix.