Endo Jolts Valeant, Offers To Buy Salix For $175 A Share

(RTTNews) - Valeant Pharmaceuticals' deal to buy Salix Pharmaceuticals could be in jeopardy, after Endo International jumped into the fray with a superior offer on Wednesday.

Endo (ENDP, ENL.TO) said it has offered to buy Salix (SLXP) for $175 per share in cash and stock, or $11 billion, superior to Valeant's (VRX, VRX.TO) offer in February to buy Salix for $158 per share in cash.

Salix shares initially jumped about 8 percent after the Wall Street Journal reported the bid, but trading was subsequently halted, only to resume at about 3.20 pm est.

Endo said its cash and stock proposal would provide Salix shareholders with a substantial premium and immediate cash value.

It would also allow Salix stockholders to participate in the significant upside potential of a specialty pharmaceuticals with a diversified platform for growth, through a material equity component, Endo said.

Endo said that in the event Salix accepts the offer, the deal could close in the second quarter, and that it is confident of getting shareholder approvals. In that case, Endo will have to pay $356 million breakup fee that would be owed to Valeant.

Meanwhile, Salix said it would review Endo's offer to buy its stock for a combination of 1.4607 shares of Endo stock and $45.00 in cash per share of Salix stock. The company said it would pursue the course of action that it believes is in the best interests of its shareholders.

In February, Canadian drug maker Valeant agreed to buy Salix Pharma for $158 per share in cash, at an enterprise value of about $14.5 billion. The deal, approved by the boards of both companies, was expected to close in the second quarter of 2015.

Salix is largely popular for its gastrointestinal products, which includes brands Xifaxan, Uceris, Relistor and Apriso. Salix is also nearing approval for a potential treatment of irritable bowel syndrome.

Valenat counts on the acquisition of Salix after last year's failed attempt to acquire Botox maker Allergan Inc (AGN). Irvine, California-based Allergan has agreed to be acquired by specialty pharmaceutical company Actavis plc (ACT) in a deal valued at $66 billion.

The drug industry is seeing lot of merger activity as companies seek to gain access to key drugs as well as to derive tax benefits.

ENDP is trading at $88.02, down $0.98 or 1.10%, on a volume of 6 million shares on the Nasdaq.

SLXP is trading at $167.82, up $10.17 or 6.45%, on a volume of 11.2 million shares on the Nasdaq.