Valeant Pharmaceuticals Intl Inc (NYSE:VRX) Crushes Endo International PLC (NASDAQ:ENDP); Buys Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP)

The stock of Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) was climbing after Valeant Pharmaceuticals Intl Inc (NYSE:VRX) decided to take the gastrointestinal drug maker for an increased bid amount. A near to billion dollars shoot up in bid price prompted Salix to say an instant ‘Yes’ to the deal, discarding Endo International PLC (NASDAQ:ENDP) from the race.

Analyst predict major swings in the market… will it affect VRX?

Largest acquisition

A Reuters report confirmed that Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) has accepted the Valeant’s revised offer of $173 per share, widely higher from its earlier bid price of $158 per share. The deal marks the largest buyout made by Valeant, which off late has been growing through acquisitions and higher cost-cuts. Moreover, the success of the deal will redeem Valeant’s CEO Michael Pearson to a certain extent, who failed to woo Allergan Inc. (NYSE:AGN) through a hostile deal last year.

Earnings outlook trimmed down last year

Meanwhile, Valeant’s success with Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) will give a great boost to investor Bill Ackman’s decision, who recently bought a $3 billion stake in the company. The acquisition is likely to close on April 1 while the sweetened offer has led to an increase in termination fee to $456 million from $100 million. It is to be seen as how early Valeant will monetize from the deal, when Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) was forced to trim down its full-year earnings outlook last year on the back of higher supply levels of its drugs.

On the other hand, Endo International PLC has quietly withdrew from the bid stating that it is eyeing other potential deals and choose to focus on research and development. The Valeant-Salix deal came as a setback to Endo International PLC, which believed that the deal was already in its hand. The stock of Salix Pharmaceuticals, Ltd. inched up by 1.98% to close at $172.75, a level near the agreed deal value.

About the Author

Coper graduated from the University of Chicagi with majors in political science and journalism.

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