Valeant to Buy Salix Pharmaceuticals for $10.1 Billion

Valeant Pharmaceuticals International Inc. announced that it is buying Salix Pharmaceuticals Ltd. for $10.1 billion.

Valeant is paying $158 a share for Salix, gaining a portfolio of gastrointestinal (GI) drugs and a strong near-term pipeline of innovative, new assets. The deal values Salix at about $14.5 billion including net debt and will provide a modest addition to earnings this year, according to Valeant. Both companies’ Boards of Directors have approved the transaction.

Valeant’s shares soared by more than 14 percent at one point during morning trades of Monday after announcing the news.

“Salix’s market-leading gastrointestinal franchise is an ideal strategic fit for Valeant’s diversified portfolio of specialty products,” said Michael Pearson, Valeant’s chairman and chief executive officer. “The growing GI market has attractive fundamentals, and Salix has a portfolio of terrific products that are outpacing the market in terms of volume growth and promising near-term pipeline of innovative products. With strong brand recognition among specialist GI prescribers, a highly rated specialty sales force, and a significant product and commercial presence across the undertreated and underserved gastrointestinal market, this acquisition offers a compelling opportunity for Valeant to create a strong platform for growth and business development.”

This is Valeant’s first major deal after its failed bid for Botox maker Allergan Inc. last year. Allergan was bought by Actavis for $66 billion.

Valeant said that it expects the transaction to close in the second quarter of 2015, and it expects more than $500 million in cost savings from both companies within six months. Salix’s top drug is Xifaxan, an antibiotic indicated for traveler’s diarrhea, is up for US approval for treatment of diarrhea caused by irritable bowel syndrome (IBS). The expanded use could add $1 billion in yearly sales, according to analysts’ estimates.

“Combining Salix’s leading market position in gastroenterology with Valeant’s scale and resources will create a stronger and more diverse business committed to providing better health solutions to health care providers and their patients. We are proud of the accomplishments of our Salix team. Together, we have built our company into the leading gastrointestinal specialty pharmaceutical company, providing solutions for patients and healthcare providers. We look forward to working with the Valeant team to ensure a smooth transition,” said Thomas W. D’Alonzo, Chairman of the Board and Acting Chief Executive Officer of Salix.

Source: Valeant Pharmaceuticals International, Inc.

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