Endo International plc (ENDP) Enters $10 Billion Offer for Salix Pharmaceuticals, Ltd. Putting Pressure On Valeant Pharmaceuticals Intl Inc

Endo International plc – Ordinary Shares (NASDAQ:ENDP) adds competition for Valeant Pharmaceuticals Intl Inc (NYSE:VRX) for Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) by placing an enticing counter-offer. Endo has, in a purported private letter, addressed to the Salix Pharmaceutical board proposed an offer of $170 to $175 per share in cash, besides stock of Endo. The deal is valued near $10 billion and would be 11 percent more than Valeant’s offer.

While the counter-offer has not been officially confirmed by either party, people familiar in the matter have confirmed the developments.

Endo’s, offer is much higher than Valeant’s, which was priced $158 per share, when the offer was made in February.

Apart from the higher per share price, Endo would also pay a penalty of $356 million for breaking the deal already drawn by Salix and Valeant. The penalty itself would cost an additional $5.50 per share.

Consolidation the Mantra

Endo’s purported offer has definitely been a surprise move and offers an insight into the drug industry, which is experiencing a phase of consolidation. There have been all types of ways in which larger companies have come to acquire smaller companies or tied-up with same-sized players, just to ensure better consolidation.

Many of the acquisitions and mergers have been driven by tax inversions from countries where taxes are high. Other reasons have also been the focus on acquiring a popular drug from another.

Whatever the reasons for the mergers, according to data released by Dealogic, the pharmaceutical industry witnessed $268 billion in transactions across the world. It was double that of the volume seen in 2013. The current fiscal year too is expected to see higher transactions with $65 billion already done.

Salix is an important player in stomach disorder treatments and was looking for a buyer in 2014. It initially had an offer from Allergan Inc, which in turn was being sought after by Valeant. However, at Allergan Inc’s purchase by Actavix Plc, Salix looked for better prospects, finalizing a $150 per share deal eventually with Valeant Pharmaceuticals.

However, Salix appears to be fortunate, as new suitor ENDO offers higher bid of $170 to $175!

Lisa Ray

Lisa Ray primarily covers Retail and Healthcare. Lisa Ray has completed her MBA (Finance) and an avid market tracker. She is a stock market analyst who closely tracks US markets along with other global markets like India. She has been expressing her views for years about markets and also advises various clients.

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