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 The deal for Salix, known for its irritable bowel syndrome drug
Xifaxan, was approved by the boards of directors of both companies,
the companies said in a news release.
The companies said the deal had an enterprise value of $14.5
billion, which would include Salix's debt and any cash on hand.
Valeant will pay $158.00 a share, valuing the all-cash transaction
at about $10.1 billion.
The merger is expected to yield more than $500 million in annual
cost savings within six months, the release said.
The transaction is expected to close in the second quarter of 2015,
and is subject to customary closing conditions and regulatory
approval.
The deal is the largest ever for Laval, Quebec-based Valeant, which
lost a takeover contest for Allergan Inc last year. The usually
acquisitive Valeant slowed its buying pace dramatically while it
pursued Allergan, and Chief Executive Michael Pearson said last
month that it would focus on buying smaller, private companies in
2015.
Pearson said in the release that Salix, based in Raleigh, North
Carolina, was an "ideal strategic fit" for Valeant.
The failure to acquire Botox-maker Allergan led Valeant to reassess
its history of growth by acquisition and to target a higher stock
price and debt-reduction in the next two to three quarters, people
familiar with the matter told Reuters in December.
Valeant said on Sunday it had reduced long-term debt to $15.3
billion at the end of December, from $17.2 billion at the end of
2013.
Valeant also released its fourth-quarter results with the
announcement, posting net income of $534.1 million, or $1.56 per
diluted share, compared to $125.0 million in the year-earlier
period, or 36 cents per diluted share.
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Revenue rose to $2.28 billion, up from $2.06 billion in the fourth
quarter of 2013.
Valeant said it expects cash earnings of $2.30 per share in this
year's first quarter.
British drugmaker Shire Plc as of last week had taken initial steps
to acquire Salix and was working with advisers on a potential offer,
according to people familiar with the matter.
Endo International Plc had expressed interest but was rebuffed by
Salix, according to a source.
CNBC first reported on Friday that Valeant was close to a deal with
Salix.
Sullivan & Cromwell LLP served as Valeant's legal counsel, and Salix
was advised by Cadwalader, Wickersham & Taft LLP.
(Reporting by Herbert Lash; Editing by Frances Kerry and Tom Brown)
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