Endo bows out of Salix fight

In light of Valeant's new offer, which increases the acquisition value by $1.3 billion, Endo is withdrawing its cash and stock proposal

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DUBLIN--Endo International plc has announced the withdrawal of its cash and stock proposal to acquire Salix Pharmaceuticals Ltd. The decision comes on the heels of an announcement from Salix and Valeant Pharmaceuticals International Inc. that they had amended their merger agreement in the face of a larger offer price from Valeant. Endo submitted its unsolicited proposal for Salix on March 11, offering to acquire all outstanding shares of Salix' common stock for a combination of 1.4607 shares of Endo common stock and $45 in cash per share of Salix common stock. (Read more on that here: "Endo counters Valeant’s offer for Salix")
 
"While we are disappointed with this outcome, we have been and will continue to be disciplined in our approach to potential acquisitions,” Endo said in a corporate statement. “We would like to wish Salix and Valeant continued success as they move forward with their transaction. As a next step, Endo is focusing our attention on other opportunities in our robust deal pipeline and on maximizing our organic growth initiatives including progressing our R&D pipeline. We will continue to drive Endo's growth as a global leader in specialty pharmaceuticals and look forward to creating value for our shareholders while improving patients' lives."
 
Valeant's new proposal, announced yesterday, increases its offer price from $158 per share of Salix' outstanding common stock to $173 per share in cash, for a total enterprise value of approximately $15.8 billion. If the minimum number of shares are tendered to the offer by the end of the day on March 31, 2015, Valeant anticipates closing the transaction on April 1. However, if all conditions of the tender offer have not been satisfied by April 8, the offer price will be reduced back to $158 per share. Additionally, the termination fee payable by Salix to Valeant has been increased by $100 million, and the outside date after which either party can terminate this deal has been moved from August 20 to May 1. Both companies' boards of directors have approved this amendment.
 
"We continue to be very excited about the combination of our two companies and we are committed to getting this deal done," J. Michael Pearson, chairman and CEO of Valeant, said in a press release. "This revised offer provides Salix shareholders with all-cash at a significant premium and the certainty to close by April 1. By offering a significant premium with a 100-percent cash offer, eliminating market and company equity risk that could arise from other non-cash offers with a 4+ month closing timeline instead of a closing by April 1st, our new arrangement creates significant shareholder value for Salix. In addition, the transaction remains modestly accretive in 2015 and will be more than 20 percent accretive in 2016."
 
“We are pleased that the enhanced offer price recognizes the value of Salix as the leading gastrointestinal specialty pharmaceutical company and delivers to our stockholders all cash consideration in the near future,” commented Thomas W. D'Alonzo, chairman of the board and acting CEO of Salix.
 
Salix first announced the establishment of a definitive agreement to be acquired by Valeant on Feb. 22. At $158 per share, Valeant's original proposal had an enterprise value of approximately $14.5 billion. (See more on that proposal here: "Salix acquisition brings Valeant back to big-time buying")


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