Date: 2015-04-01
Type of information: Company acquisition
Acquired company: Salix Pharmaceuticals (USA - NC)
Acquiring company: Valeant Pharmaceuticals (Canada)
Amount: $15.8 billion
Terms: * On April 1, 2015, Valeant Pharmaceuticals announced the expiration of the tender offer by a subsidiary of Valeant Pharmaceuticals International to purchase all of the outstanding shares of Salix Pharmaceuticals for a price of $173.00 per share in cash, without interest, less any applicable withholding taxes. The Offer expired at midnight, Eastern time, on April 1, 2015. Computershare Trust Company, N.A., the depositary for the tender offer, has advised that, as of the expiration of the Offer, a total of 48,385,169 shares had been tendered into and not validly withdrawn from the Offer, representing approximately 75.25% of Salix's outstanding shares and a sufficient number of shares such that the minimum tender condition to the Offer was satisfied. Additionally, the depositary has advised that an additional 8,087,609 shares had been tendered by notice of guaranteed delivery, representing approximately 12.58% of Salix's outstanding shares. Accordingly, all shares that were validly tendered and not properly withdrawn were accepted for payment and Valeant will promptly pay for all such tendered shares in accordance with the terms of the Offer. As a result of the merger, Salix will become a wholly owned subsidiary of VPI. In the merger, each share of Salix (other than those shares held by Valeant or Salix or any of their respective subsidiaries) will be cancelled and converted into the right to receive the same $173.00 per share in cash, without interest, less any applicable withholding taxes, that was paid in the Offer. Following completion of the merger, the common stock of Salix will no longer be listed for trading on the NASDAQ Global Select Market, which is expected to take effect later today. * On March 16, 2015, Valeant Pharmaceuticals and Salix Pharmaceuticals announced that they have entered into an amendment to their Agreement and Plan of Merger, dated February 20, 2015. Pursuant to the amendment, Valeant increased the offer price to acquire all the outstanding common stock of Salix from $158.00 per share to $173.00 per share in cash, or a total enterprise value of approximately $15.8 billion, through April 7, 2015. The revised offer price of $173.00 per share provides an additional approximately $1 billion in cash consideration to Salix stockholders, and represents an increase of 9.49% and 43.9%, respectively, over the original offer price of $158.00 per share and the unaffected price of Salix common stock on January 16, 2015, of $120.19. As previously announced, if the minimum tender condition is satisfied at the end of the day on March 31, 2015, Valeant expects to close the transaction on April 1, 2015. If all of the conditions to the tender offer have not been satisfied by April 8, 2015, the offer price will drop back to $158.00 per share. In consideration for the increase of the offer price through April 7, 2015, the termination fee payable by Salix to Valeant has been increased by $100 million and the outside date after which either party may terminate the transaction has been moved from August 20, 2015, to May 1, 2015. The amendment was approved by the Boards of Directors of both companies. Sullivan & Cromwell LLP served as Valeant's legal counsel, and Salix was advised by Cadwalader Wickersham & Taft LLP. Deutsche Bank and HSBC Securities (USA) Inc. acted as financial advisors to Valeant. Centerview Partners and J.P. Morgan acted as financial advisors to Salix. * On February 22, 2015, Valeant Pharmaceuticals and Salix Pharmaceuticals announced that they have entered into a definitive agreement under which Valeant will acquire all of the outstanding common stock of Salix for $158.00 per share in cash, or a total enterprise value of approximately $14.5 billion. The transaction was approved by the Boards of Directors of both companies. The acquisition is structured as an all-cash tender offer for all of the outstanding shares of Salix common stock at a price of $158.00 per share followed by a merger in which each remaining untendered share of Salix common stock would be converted into the right to receive the same $158.00 cash per share consideration as in the tender offer. The all-cash offer will be financed through a combination of bank debt and bonds. As a result of the need to draw down inventories, EBITDA will be artificially low in 2014 and 2015, resulting in the initial net leverage ratio of approximately 5.6. Valeant is committed to reducing its net leverage ratio to be below 4.0 by the second half of 2016. As a result of the plan to reduce wholesaler inventory levels in 2015, the transaction is expected to be modestly accretive to 2015 cash EPS, but over 20% accretive to 2016 cash EPS.The transaction, which is expected to close in the second quarter of 2015, is subject to customary closing conditions and regulatory approval. The combination is expected to yield greater than $500 million in annual cost savings from the cost base of the combined company. Synergies are expected to be achieved within six months of close, primarily from reductions in corporate overhead and R&D rationalization, with the cost to achieve these synergies to be approximately 65%. Valeant and Salix will determine how best to integrate the two companies to leverage the combined strengths of both while ensuring a smooth and orderly transition. Consistent with Valeant\'s approach to integrating Bausch + Lomb, there are no planned reductions to Salix\'s highly rated specialty sales forces or hospital, key account and field reimbursement teams and we will determine the optimal size of Primary Care Sales Force through the integration process.
Details: Salix Pharmaceuticals is a gastrointestinal market leader with a portfolio of 22 total products, including prescription brands Xifaxan® (rifaximin) or reduction in risk of overt hepatic encephalopathy (HE) recurrence in patients ≥ 18 years of age, Uceris® (budesonide) and Apriso® (mesalamine) for the treatment for ulcerative colitis, and Relistor® (methylnaltrexone bromide) for the treatment of opioid-induced constipation (OIC) in pain from advanced illness., as well as a strong near- term pipeline of innovative, new assets. Last year, the company has also launched of Ruconest® (C1 Esterase Inhibitor [Recombinant]) 50 IU/kg in the United States for the treatment of acute angioedema attacks in adult and adolescent patients with hereditary angioedema (HAE).
Related: Gastrointestinal diseases
