Valeant’s vanity puts an end to pursuit of Salix by Endo
Endo’s competing offer made Valeant raise its bid by US $1 billion to US $15.5 billion in surprisingly short time. According to EvaluatePharma® forecast resulting company sales will grow 12% every year to reach US $7.9 billion in 2020. Salix’s 3 products will become a part of Valeant’s top-10 list after acquisition, including the most promising product — Xifaxan (antibiotic rifaximin for GI infections) with forecasted US $2 billion in sales and a 24% share in company portfolio in 2020. The deal is profitable on several accounts: portfolio synergy, sharing of expenses and a lesser tax burden due to Salix’s relocation outside the US (American Salix will become a part of Canadian Valeant). The acquisition did become possible, however, because of low current cost of debt financing. The resulting company will begin operations with a US $22 billion debt, which is roughly equal to a third of Valeant’s market capitalization. This level of debt is ordinarily unheard of, but does not matter in current market conditions.
Sources: EP VantageSM, EvaluatePharma®