Sent sharply higher by Sunday’s news that it plans to acquire Salix Pharmaceuticals Ltd., Valeant Pharmaceuticals International Inc. shares on Monday continued to hold ground they gained at the market’s opening bell.
After opening $16.81 higher than Friday’s $173.26 closing price, Valeant shares (NYSE: VRX) at one point on Monday reached a 52-week high of $200.76—nearly 16 percent higher than the previous close. For much of the day, the share price hovered around the $198 mark.
Salix is a Raleigh, N.C.-based pharmaceutical and medical device maker specializing in gastrointestinal products. Quebec-based Valeant, parent of Bausch & Lomb Inc., on Sunday announced it has inked a definitive agreement to pay $158 a share for Salix in an all-cash deal valued at $14.5 billion.
Salix shares (Nasdaq: SLXP) on Monday opened $1.50 lower than the stock’s previous $157.85 closing price and mostly stayed in the $156 range.
Valeant chairman and CEO Michael Pearson called the Salix acquisition “an ideal strategic fit for Valeant’s diversified portfolio of specialty products.”
“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 a promising near-term pipeline of innovative products,” he said.
Salix’s portfolio includes Xifaxan, Uceris, Relistor and Apriso. The firm also has several new gastrointestinal drugs in its pipeline.
The Salix announcement comes some three months after Valeant’s attempt to force a hostile takeover of Botox maker Allergan Inc. went down to defeat.
Activis PLC—a drug maker headed by onetime Bausch & Lomb CEO Brent Saunders—swooped in at the 11th hour, offering a price for Allergan that Pearson was unwilling to top. Saunders left the eye-care company when Valeant acquired the Rochester-born firm.
In Valeant’s contentious six-month long pursuit of Allergan, the Botox maker put up a tough fight, accusing Valeant of falsely pumping up Bausch & Lomb’s post-acquisition sales figures to bolster its contention that Valeant would make a poor parent.
Pearson hotly denied that charge.
“As a public company CEO, I cannot say that we’re growing 17 percent in the U.S. if we’re not,” he said in a September interview with the Rochester Business Journal.
Allergan also fought Valeant in court, accusing Valeant of skirting Securities and Exchange Commission rules in attempts wage a proxy fight. A federal judge said Valeant could mount the proxy battle but only if it disclosed that it made moves that might be found to have violated SEC provisions.
In a broadcast interview Monday, Pearson said he was unconcerned by the possibility that questions about statements Salix had made concerning its inventory could raise accounting questions.
“The accounting issues are behind them. (On) the inventory issues we have almost perfect information. We went to the distributors and we know exactly by (stock keeping unit) and by distributor how much inventory they have in the channel,” Pearson told a CNBC interviewer.
Valeant plans to take on debt, borrowing from lenders and floating bonds, to finance the Salix purchase.
The deal was arranged as a cash transaction rather than an equity deal at Salix’s urging and the borrowings would not pose problems for Valeant, Pearson said.
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