Shire Plc and Valeant to Potentially Make an Offer for Salix (SLXP) Pharmaceuticals

Shares of the Salix Pharmaceuticals Inc. (SLXP) were trading up +4.82 or +3.23 percent to $154.00 per share in this morning's premarket. According to sources familiar with the matter, British pharmaceutical company, Shire Plc has initiated steps on making a potential bid for the company and is currently working with advisors. In a related matter, Valeant Pharmaceuticals (VRX) has arranged financing to take over Salix.

Salix Pharmaceuticals stock closed at $149.18 per share, up +5.84 or +4.07 percent in Thursday's regular trading session.

Raleigh, North Carolina based Salix Pharmaceuticals, Inc. was founded in 1989 and is a pharmaceutical company specializing in the treatment of gastrointestinal disorders. Salix produces a number of treatments such as rifaxin, an antibiotic based on rifamycin, Pepcid (famotidine) for treating duodenal ulcers and gastroesophagal reflux disease or GERD and Metozolov ODT, an orally disintegrating tablet used in the treatment of refractory GERD, reflux that does not respond to conventional therapy.

UK based Shire Plc is headquartered in Ireland and is a large multinational pharmaceutical company with a strong U.S. operations base. The company is best known for brands such as Adderall XR, Pentasa, Vyvanse, Intuniv and Lialda among other well known pharmaceutical products.

Montreal, Canada based Valeant Pharmaceuticals International Inc. is a large pharmaceutical company which focuses on treatments for infectious diseases, dermatology and neurology. The company is known for manufacturing the antidepressant Wellbutrin XL, as well as Efudex, Mestinon and Diastat.

Salix has been in the news lately after the company's Chief Executive Officer Carolyn Logan resigned last month after other executives left the firm. In addition, the company announced in November that its supply of Xifaxan - a treatment for irritable bowel syndrome - was higher than previously stated. The company consequently cut its full year forecast.

Last month, the company reported it had resolved an accounting problem in relation to its inventory setback, which, when disclosed, sent the stock reeling, down -37 percent on the day of the report. Salix could still be prevented from a potential deal due to litigation and possible fines stemming from the issue. Consequently, the company announced it would restate all of its 2013 financial statements and statements for the first three quarters of 2014.

In related news, Valeant Pharmaceutical reportedly has arranged financing to potentially take over Salix as it prepares a bid for the company. Sources close to the matter stated that Valeant will most likely bid over $150 per share for the company. With debt, Salix is valued at approximately $11 billion.

Salix stock was up sharply in yesterday's regular trading session, due in large part to the takeover prospects. No comments from Salix, Valeant or Shire Plc have been forthcoming and a deal for a formal bid from either company have yet to be announced. Nevertheless, Salix stock is gaining in Friday's premarket and will most likely continue rising given that it has the interest of two suitors. A deal from either company could potentially materialize over the weekend.

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(SLXP)
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Published on Feb 13, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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