(New throughout, adds background, details on company)
April 21 (Reuters) - Shares of Canada’s Concordia Healthcare Corp surged 25 percent on Thursday after Bloomberg reported that U.S. private equity firm Blackstone Group LP is considering a takeover, citing people familiar with the matter.
Trading in Concordia shares was then halted on the Nasdaq and the Toronto Stock Exchange. The drug developer had a market valuation of about $1.2 billion as of Wednesday’s close.
The talks are at an early stage and a deal may not happen, Bloomberg said. (bloom.bg/1rpQJ6J)
Concordia was not immediately available for comment, while Blackstone declined to comment on the report.
Concordia shares have taken a beating after a pricing and distribution scandal hit larger peer Valeant Pharmaceuticals International Inc.
Banking and legal sources noted that because of their similar strategy of acquisition-driven growth, Concordia has been caught up in the Valeant downdraft. One banker said Concordia had been dubbed “baby Valeant.”
Some of Concordia’s top executives have also worked with Biovail, which combined with Valeant to help create the current company.
Valeant has faced intense scrutiny and U.S. congressional investigations over its steep price increases for older medicines, as well as for other questionable business and accounting practices. Its share price has slid some 87 percent since last August.
A delay in filing its annual report has more recently placed Valeant in jeopardy of defaulting on its hefty $30 billion debt.
Concordia, which posted a net loss in 2015 due to acquisition and restructuring related expenses, has more than $3 billion in debt.
Even after Thursday’s gains, Concordia’s stock price remained down about 65 percent since hitting a peak in September. (Reporting by Rosmi Shaji in Bengaluru, John Tilak and Euan Rocha in Toronto, Rod Nickel in Winnipeg; Editing by Savio D’Souza and David Gregorio)