Ed Hammond and Scott Deveau New York and Toronto
VALEANT Pharmaceuticals International agreed to buy Salix Pharmaceuticals for about $10.1 billion (R117.2bn) in cash to add gastrointestinal drugs to its stable of offerings.
Salix investors would get $158 a share, the companies said on Sunday. Salix shares rose $7.11 to $157.85 on Friday, almost eliminating any premium in the purchase price. The deal carries an enterprise value of about $14.5bn.
The purchase of Salix marks a comeback for Valeant, which was thwarted last year in a long-running quest to buy Allergan, the maker of Botox. Valeant is a serial acquirer, using an advantageous tax structure to make purchases and then slashing research and development costs to boost profits.
The Salix deal came together just three-and-a-half weeks after Valeant was approached by bankers about Salix being for sale, Valeant chief executive Mike Pearson said. Valeant was focused on smaller transactions when the opportunity presented itself, he said. “You can never predict the timing of a larger deal.”
Valeant was still focused on small- to medium-sized acquisitions, and might consider a larger deal if one presented itself, Pearson said. “Our strategy has not changed.”
Pearson said he expected the purchase to be minimally accretive this year, and would add a 20 percent boost to earnings per share in 2016.
“Nice addition to Valeant’s product offering,” Umer Raffat at Evercore ISI said on Sunday.
The transaction is Valeant’s largest, according to data. Excluding Salix, Valeant had completed $19.2bn of deals in the past five years, including the acquisition of Bausch & Lomb in 2013.
Valeant also reported fourth-quarter net income that jumped to $534.9 million from $123.8m a year earlier. Revenue climbed to $2.28bn from $2.06bn.
The results were “a touch higher” than the outlook that Valeant provided in December, Raffat said.
Salix was advised by CenterView Partners, JPMorgan Chase and law firm Cadwalader, Wickersham & Taft. Valeant was advised by Deutsche Bank, HSBC Holdings and law firm Sullivan & Cromwell.
Valeant emerged this month with the lead offer for the assets of Dendreon, a bankrupt developer of a drug for advanced prostate cancer.
Valeant had a sizable presence in New Jersey, though it was based in Canada in part because of lower corporate tax rates, Pearson has said.
Salix makes drugs to treat ulcerative colitis and travellers’ diarrhoea, and is nearing approval for a potential treatment of irritable bowel syndrome. – Bloomberg