Investors responded favorably to Valeant Pharmaceuticals’ deal to acquire Raleigh-based Salix Pharmaceuticals, pushing Valeant’s stock up 15 percent Monday.
Valeant announced Sunday that it had reached a deal to acquire Salix for $158 a share, or roughly $10.1 billion in cash. Including Salix’s debt, the deal is valued at $14.5 billion.
Salix could be required to pay up to $400 million if its sale to Valeant doesn’t close, the company reported in a regulatory filing. The terms of the acquisition include a $356.4 million termination fee and the payment of out-of-pocket expenses of up to $50 million to Valeant.
Salix officials have also agreed not to solicit rival acquisition offers. But Salix can provide information to and engage in discussions and negotiations with a third party that makes an unsolicited bid for the company.
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In a research note Monday, Sterne Agee analysts Shibani Malhotra and Austin Nelson wrote that they expect the deal with Valeant to close.
“While there have been reports of interest from other potential suitors, it remains unclear whether another bidder will emerge and we expect this deal to close as others may already have stepped in and been rebuffed,” they wrote.
On a conference call with analysts Monday, Valeant executives said they expect to achieve $500 million in cost savings as a result of the acquisition. Some of those savings will come from redundant back office operations in areas such as IT and finance, they said.
Valeant CEO J. Michael Pearson said there would be no reductions to “Salix’s specialty sales forces or hospital, key account, and field reimbursement teams, as we believe these customer-facing roles have played and will play a huge role in the success of the company.”
Salix employs about 915 employees, including more than 300 people in Raleigh.
Valeant executives were also asked about how confident they were that Salix’s best-selling drug would be approved to treat irritable bowel syndrome. Salix believes peak annual sales for the treatment could reach $2.1 billion, with sales totaling between $125 million and $150 million during the first four quarters after FDA approval.
“It’s obviously a key part of this acquisition,” Pearon said. “… I’d say we feel quite comfortable that this indication will be approved.”
Valeant shares closed Monday at $198.75, up $25.89. Salix stock fell $2.09 to close at $155.76.