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 The drugmaker did not name the potential buyers it was talking with
but people familiar with the matter told Reuters Japan's Takeda
Pharmaceutical Co Ltd <4502.T> was interested in Salix.
The deal could raise as much as $10 billion for the indebted
drugmaker, the people said, asking not to be identified because the
discussions are private. Valeant acquired Salix last year for $14.5
billion.
"The discussions may or may not lead to a definitive agreement,"
Valeant said in a statement late on Tuesday.
"Takeda is continuously considering various options aiming to
accelerate its growth. At this point, we have nothing to
be disclosed," the company said in a statement on Wednesday.
The Japanese bourse earlier in the day suspended trading in Takeda
shares until the company released its statement. Its shares then
fell as much as 4 percent, compared with a 1.8 percent dip in the
benchmark Nikkei 225 index <.N225>.
Valeant is working with investment bank Morgan Stanley on the sale,
the people told Reuters. Another bidder may also be interested in
the Salix business, they added.
Salix Pharmaceuticals makes treatments for disorders such as
irritable bowel syndrome and diarrhea.
The proceeds from the sale would likely be used to pay down the
majority of Valeant's roughly $12 billion in bank loans. Valeant,
which has a market value of $6 billion, has an overall debt pile of
about $30 billion.
The company's new chief executive officer, Joseph Papa, has
committed to selling around $8 billion in non-core assets to help
pay down debt that it accumulated over the course of a series of
large acquisitions.
On Monday, Bloomberg reported that Valeant's former chief executive
Michael Pearson and ex-chief financial officer Howard Schiller are
targets of a U.S. criminal probe against the drugmaker over its ties
to specialty pharmacy Philidor that helped boost its sales. Schiller
also served as interim CEO while Pearson was on medical leave.
The report, citing people familiar with the matter, said the case
against Valeant could yield charges within weeks, or lead to a
settlement with the company.
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Valeant issued a statement saying it has been fully cooperating with
authorities conducting the investigation.
Valeant used Philidor to overcome insurer reimbursement rejections
of its medications, with Philidor resubmitting claims to insurers
until they were approved, according to numerous media reports late
last year. It has since severed ties with the pharmacy company.
Valeant has been struggling to revive its dwindling share price
since late last year, when controversy around its drug pricing
practices sent shares plunging. Its stock is down around 90 percent
since its 2015 highs.
Takeda tried earlier this year to buy Salix as part of a joint bid
with private equity firm TPG, a few weeks before Papa took over as
CEO. But Valeant's board rejected the offer as it wanted to give
Papa time to map out a course for the company.
Takeda told Reuters in September that it was scouting for
multibillion-dollar acquisitions in the United States and other
overseas markets as it seeks to boost its core therapy areas,
including gastrointestinal medicine.
News of the talks was first reported by the Wall Street Journal.
The U.S.-listed shares of Valeant surged to close up 33.7 percent at
$23.86 on Tuesday. The stock, which dipped 3 percent in extended
trading, had fallen about 78 percent this year.
(Reporting by Carl O'Donnell in New York, Svea Herbst in Boston and
Subrat Patnaik in Bengaluru; Additional reporting by Bill Berkrot in
New York and Tim Kelly in Tokyo.; Editing by James Dalgleish and
Muralikumar Anantharaman)
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