Endo International tables $11.2 bn bid for Salix Pharmaceuticals

Ireland-based specialty healthcare company Endo International Plc yesterday offered to buy Salix Pharmaceuticals Ltd for around $11.2 billion, trumping an agreed bid by Valeant Pharmaceuticals International Inc.

Under the terms of the cash and stock offer, Endo International is paying 1.4607 in shares and $45 in cash, valuing the transaction at $175, based on Salix Pharmaceuticals' closing stock price on 10 March 2015.

Salix shareholders will own about 40 per cent of the combined company, and have one seat on the new company's board.

If the deal does go through, Endo International would have to pay Valeant Pharmaceuticals a breakup fee of $356 million.

The surprise move comes after Canada's Valeant Pharmaceuticals signed a deal last month to buy Salix for $158 a share in cash, or about $10 billion.

Valeant, one of the most aggressive acquirers in the pharmaceutical industry, said in a statement, ''We are firmly committed to our all-cash agreed transaction, which delivers immediate and certain value to Salix shareholders.''

Salix said it would review Endo International's offer.

Endo International, which has debt of about $4.36 billion and cash of around $409 million, hopes to sign a definitive merger agreement within one week of starting talks with Salix.

North Carolina-based Salix develops and markets prescription pharmaceutical products and medical devices for the prevention and treatment of gastrointestinal diseases.

Salix sells hepatic encephalopathy drug called Xifaxan, which is expected to bring in annual sales revenue of over $1 billion if the US Food and Drug Administration approves it to treat diarrhea caused by irritable bowel syndrome.

Salix posted a loss of $414.9 million last year on revenues of $1.1 billion.

Endo International, which has its headquarters in Dublin, Ireland and Pennsylvania US, was founded in 1997 through a management buyout from DuPont Merck.

It develops and sells branded pharmaceutical, generic and device products.

The proposed acquisition is the latest in the about $60 billion in deals announced so far this year in the pharma and biotech industry as many companies are strengthening their portfolios as old drugs go generic.

Earlier Pfizer Inc agreed to buy Hospira Inc for about $15 billion, and AbbVie Inc agreed to buy Pharmacyclics Inc for about $21 billion (AbbVie to acquire onclology drugmaker Pharmacyclics for $21 bn).