By Liz Hoffman
Valeant Pharmaceuticals International Inc. is nearing a deal to
buy Salix Pharmaceuticals Ltd. for about $10 billion, in the latest
sign the rapid pace of consolidation in the drug industry is set to
continue.
Valeant would pay $158 a share in cash for Salix, in a deal that
could be announced as soon as Sunday, people familiar with the
matter said. That is just above the drug company's closing share
price Friday of $157.85, following weeks of reports of the
potential deal.
Bloomberg earlier reported that Valeant and Salix had reached a
deal at $158 a share.
A transaction would represent a marriage of two companies that
tried but failed last year to strike tie-ups amid a recent frenzy
of deal making in the pharmaceutical sector. Many companies in the
industry are seeking mergers that will help them become more
efficient and keep up with rivals.
Valeant failed in a seven-month hostile effort to acquire Botox
maker Allergan Inc., which eventually agreed to be bought by
Actavis PLC for $66 billion.
When it was seeking to fend off Valeant, Allergan discussed an
acquisition with Salix, though the talks never resulted in a deal.
Actavis also considered acquiring Salix last summer, people
familiar with the matter said at the time.
Salix, meanwhile, canceled its own planned acquisition of a unit
of Italian drug maker Cosmo Pharmaceuticals SpA amid shareholder
pushback and political pressure on such foreign tax-driven mergers,
known as "inversions."
Salix in November disclosed a revision to its
wholesale-inventory levels that suggested demand for its drugs,
which treat irritable-bowel syndrome, liver problems and other rare
diseases, might not be as high as previously thought.
The disclosure sent Salix's stock price tumbling and led the
company to withdraw its earnings guidance for the year. It was
followed by the departures of the company's chief executive and
chief financial officer.
Salix acted quickly to clear out its drug backlog, a move many
investors saw as a sign it may quickly re-enter talks to be bought
by a rival.
Agreed drug-company mergers soared last year to $267 billion,
more than double the 2013 level. The trend has shown signs of
continuing, with Shire PLC last month agreeing to pay $5.2 billion
for NPS Pharmaceuticals Inc.
Write to Liz Hoffman at liz.hoffman@wsj.com
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