By Sarah Roden
Valeant Pharmaceuticals (NYSE:VRX) beat out Endo International in a battle to take over Salix Pharmaceuticals (NASDAQ:SLXP) in a deal valued at $11.1 billion. Valeant had originally agreed to pay $158 per share of Salix but increased the offer to $178 per share. Valeant offered an all-cash offer while Endo’s offer was cash-and-stock valued at about $172 per share, though Endo later withdrew this deal.
Valeant CEO J. Michael Pearson commented, “We continue to be very excited about the combination of our two companies and we are committed to getting this deal done. This revised offer provides Salix shareholders with all-cash at a significant premium and the certainty to close by April 1.”
Valeant develops a broad range of medication to treat dermatological needs, eye health, and infectious diseases while Salix specializes in gastrointestinal disorders. This deal comes a year after Valeant failed to acquire Allergen, most known for Botox treatment.
Aside from the failed Allergen buyout, Valeant has been growing by steadily acquiring other pharmaceutical and cosmeceutical companies. Since 2012, Valeant has acquired more than one dozen companies. Some speculate that Valeant may have trouble paying for the latest acquisition because they did not make a payment scheme immediately clear. Aside from financial speculations, analysts were bullish on Valeant Pharma before they had secured the deal.
On March 16, Canaccord Genuity analyst Neil Maruoka maintained a Buy rating on Valeant Pharma with a price target of $230. Maruoka was confident that Valeant Pharma would seal the deal with Salix because the “all-cash offer provides more certainty for Salix shareholders and a faster close, as it is not dependent on additional due diligence.” The analyst continued, “We doubt Endo will be inclined to raise its bid at this point, so we have even higher conviction level that Valeant will emerge the winner.”
According to Tipranks, Neil Maruoka has rated Valeant 8 times since April 2014, earning a 100% success rate recommending the pharmaceutical company with an average return of +31.5% per VRX recommendation. Overall, Maruoka has an 81% success rate recommending stocks with a +15.8 average return per recommendation.
Separately on March 16, analyst Irina Rivkind of Cantor Fitzgerald reiterated a Buy rating on Valeant with a price target of $222. The analyst also voiced confidence that Salix would accept Valeant’s offer and did not foresee “a bidding war” with Endo’s “less significant” offer.
According to Tipranks, Irina Rivkind has rated Valeant Pharma 9 times since March 2014, earning an 89% success rate recommending the company with a +41.6% average return per VRX rating. Overall, Rivkind Koffler has a 78% overall success rate recommending stocks with a +39% average return per recommendation.