Salix Pharmaceuticals (SLXP) Soars on Acquisition Offer
Salix Pharmaceuticals is a specialty pharmaceutical company that acquires, develops and commercializes prescription drugs and medical devices used in the treatment of a variety of gastrointestinal diseases (diseases affecting the digestive tract).
Shares of Raleigh, North Carolina, based Salix Pharmaceuticals Ltd. (SLXP) rose sharply on Tuesday, after a report that Allergan Inc. (AGN) approached it as an acquisition target. Salix stock was up 15.54%, rising $21.63 per share to close at $160.80, on volume of 6,764,888 shares. The stock closed at its highest level since 2000 on news of the acquisition.
Salix stock was up strongly on the acquisition approach by global healthcare company, Allergan. As a result of the news of the acquisition, Salix's stock reached it's highest level in 14 years, increasing its market value to an estimated $10.2 billion.
According to Allergan Chief Executive Officer David Pyott, Allergan is looking to make the acquisition of Salix - or possibly another company - while fending off a takeover by Valeant Pharmaceuticals International (VRX).
The other potential acquisition for Allergan is Dublin, Ireland, based Jazz Pharmaceuticals Plc (JAZZ), a manufacturer of narcolepsy, psychiatry and oncology drugs. Jazz is has a similar market capitalization to Salix, at $9.4 billion, which is within the range of potential acquisition by Allergan.
Irvine, California, based Allergan develops and commercializes innovative specialty pharmaceutical, medical device and over-the-counter products for the ophthalmic, neurological, medical aesthetics, medical dermatology, breast aesthetics, obesity intervention, urological and other specialty markets. It currently does business in more than 100 countries. It's stock closed up 3.99% on Tuesday, up $6.21 per share at $161.82.
Apart from the interest expressed by Allergan, Salix is in the process of merging with Italian drug maker Cosmo Pharmaceuticals SpA. The merger is expected to close by the end of 2014, and is valued at $2.7 billion. The merger with Cosmo will enable Salix to move its tax address to Ireland, which has substantially lower corporate income taxes than the US (12.5% in Ireland vs. 40% in the US).
In other news on Tuesday, Salix announced that it has received notice of the early termination of the waiting period for U.S. antitrust review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, relating to its previously announced merger with Cosmo Pharmaceuticals. The waiting period was scheduled to expire on August 21, 2014. Termination of the waiting period satisfies a condition to the closing of the transaction. Completion of the transaction is still subject to approval by Salix's stockholders as well as other closing conditions.
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