UPDATE 4-Valeant trumps Endo with $10.96 billion bid for Salix Pharma

Mon Mar 16, 2015 5:16pm EDT
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(Updates with financing details)

By Ankur Banerjee and Rod Nickel

March 16 (Reuters) - Valeant Pharmaceuticals International Inc increased its takeover offer for Salix Pharmaceuticals Inc to $10.96 billion in cash on Monday, eliminating Endo International Plc, the only other bidder for the maker of gastrointestinal drugs.

Salix has agreed to Valeant's new offer of $173 a share in cash, up from the bid of $158 per share in cash that Valeant made late last month, the two companies said in a joint statement.

Salix would be the largest purchase ever made by Canada-based Valeant, whose growth has long been fueled by acquisitions and cost-cutting. The acquisition would offer some redemption for dealmaking Valeant Chief Executive Michael Pearson, whose hostile bid for Allergan Inc failed last year.

It would also be a boost for investor Bill Ackman, who announced last week he had bought a more than $3 billion stake in Valeant after having worked with the company on the Allergan bid.

Even so, the deal would sharply raise Valeant's debt, and it is buying a company that last year was forced to slash its full-year earnings forecast after supply levels for certain drugs were higher than earlier indicated.

The short bidding war for Salix pitted Valeant's Pearson against his former protege, Endo Chief Executive Rajiv De Silva, a top executive at Valeant until 2012.

Salix shares rose 2 percent to $172.75 on the Nasdaq on Monday, while Valeant's U.S.-listed shares gained 2.5 percent to $202.34.   Continued...