Valeant Pharmaceuticals International Inc raised its offer for Salix Pharmaceuticals Ltd by more than US$1 billion on Monday, forcing rival bidder Endo International PLC out of the running.
Canada’s Valeant said it would pay US$11.11 billion in cash, or US$173 per share, a 2 percent premium over the closing price on Friday in New York trading. The companies put the deal’s enterprise value at about US$15.8 billion, including debt owed by Salix.
Landing Salix is somewhat of a redemption for Valeant, which was snubbed in its pursuit of Botox-maker Allergan Inc last year.
On Monday, Allergan said that its acquisition by Actavis PLC, which like Endo is based in Ireland, has been approved by European regulators.
Valeant acquired contact lens-maker Bausch & Lomb Inc for US$8.7 billion in 2013.
“We are committed to getting this deal done,” Valeant chairman and chief executive J. Michael Pearson said in a statement.
Valeant’s pursuit of Salix is the latest in a string of big acquisitions in the drug sector that went into overdrive last year.
Big drugmakers have lost tens of billions in annual revenue in recent years due to a tsunami of cheap generic copycats of popular pills taken by millions of people.
Because it can take a decade or more to bring a new drug to market, industry leaders are targeting smaller pharmaceutical and biotech companies with existing drugs and promising experimental ones that have undergone some patient testing and could be approved in the near future.
Developers of specialty drugs are among top targets because those medicines usually command very high prices. Less than two weeks ago, AbbVie Inc said it would spend US$21 billion to buy Pharmacyclics Inc and gain access to a blood cancer treatment that could bring in US$7 billion in annual sales in a few years.
Salix, based in Raleigh, North Carolina, sells drugs including Pepcid and Zegerid for ulcers and gastroesophageal reflux, and Relistor for constipation caused by opioid drugs. It is developing two more drugs for opioid-induced constipation, one for rheumatoid arthritis and a drug called rifaximin for Crohn’s disease. Rifaximin is under review for a third use: treating irritable bowel syndrome. Last year, Salix reported total revenue of US$1.13 billion and a net loss of US$415 million.
Valeant specializes in dermatology, eye health and neurology. It focuses on acquisitions rather than internal drug development. Last year it had revenue of US$8.3 billion and net income of US$912 million.
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