Salix and Cosmo call off the marriage

Salix Pharmaceuticals and Cosmo Technologies announce termination of their merger agreement

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RALEIGH, N.C. & LAINATE, Italy—Salix Pharmaceuticals, Ltd. and Cosmo Pharmaceuticals S.p.A. have agreed to terminate their previously announced merger agreement pursuant to which Salix would have combined with, and become a wholly owned subsidiary of, Cosmo Technologies Limited, a subsidiary of Cosmo. Under the terms of the termination, which is effective immediately, Salix will make a $25 million payment to Cosmo, a breakup fee that has been characterized as low by analysts.
 
Carolyn Logan, president and CEO of Salix stated, “When we announced our agreement to merge with Cosmo Technologies in July we believed the combination would generate significant value for our stockholders through the addition of key products to our development pipeline and a more efficient corporate structure that would enhance our profitability. Since then, however, the changed political environment has created more uncertainty regarding the potential benefits we expected to achieve. As a result, Salix and Cosmo have mutually agreed to terminate the proposed transaction. We look forward to a continuation of our long-standing relationship with Cosmo.”
 
In August, DDNews reported the just-announced merger plans. At that time Logan was enthusiastic about the deal, saying that “Cosmo is an excellent company which we have known for years, so we are very pleased to announce this transaction. Combining with Cosmo Tech makes tremendous strategic and financial sense for us as it further strengthens and consolidates our position as a leader in acquiring, developing and marketing products to treat gastrointestinal disease and disorders.
 
Logan opined that “We view this transaction as an evolutionary step that should create value and higher returns for our shareholders by bolstering our competitive position in the marketplace, all within an efficient corporate structure [headquartered in Ireland] that should increase our profitability and accelerate our long-term growth.” With the U.S. government making such “inversions” less attractive from a tax-reduction perspective, the prospective partners decided to call the whole thing off.
 
Concerning the about face, Alessandro Della Cha, CEO of Cosmo stated, “The deal with Salix showed the potential of three products of ours for U.S. The development path of the pipeline continued in the meantime, so this termination has no effect on value creation. Our focus is now on obtaining approval of SIC-8000 and filing Rifamycin SV and Methylene Blue NDA in the next months. While all strategic options are in our hands, we look forward to a continuation of our long-standing relationship with Salix.”
 
Cosmo Pharmaceuticals S.p.A. is a specialty pharmaceutical company headquartered in Lainate, Italy. The company’s proprietary clinical development pipeline addresses innovative treatments for the gastrointestinal tract, specifically inflammatory bowel diseases, colon infections and colon diagnosis, as well as selected topically treated skin disorders. Cosmo’s proprietary MMX® technology, designed to deliver active ingredients in a targeted manner in the colon, is at the core of the company’s product pipeline and was developed from its expertise in formulating and manufacturing gastrointestinal drugs for international clients at its GMP (Good Manufacturing Practice) facilities in Lainate, Italy. Currently, Cosmo, through its appointed partners, has three products on the market and six in clinical development.
 
Salix Pharmaceuticals, Ltd., headquartered in Raleigh, North Carolina, develops and markets prescription pharmaceutical products and medical devices for the prevention and treatment of gastrointestinal diseases. Salix’s strategy is to in-license or acquire late-stage or marketed proprietary therapeutic products, complete any required development and regulatory submission of these products and commercialize them through Salix’s 500-member specialty sales force.


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