JMP Securities Comments On Salix Pharmaceutical's Takeover Valuation

Following Valeant Pharmaceutical’s VRX Acquisition of Salix Pharmaceuticals, Ltd. SLXP, analysts at JMP Securities offered commentary on the deal.

Within the note, Oren Livnat wrote, “Salix Pharmaceuticals has agreed to be acquired by Valeant for ~$14.5B cash ($158/share), a valuation below some expectations but, in our view, likely close to the best offer Salix will receive.”

Given that Salix has been in acquisition talks for the past few months, Livnat suspects that the $158 per share price is close to where a deal would have been reached under any circumstance, especially as Salix faces FDA risk from the upcoming PDUFA date for Xifaxan.

According to Livnat, the $158 per share value is 17.6 times Salix’s 2016 EPS guidance, “which is below where other recent Spec Pharma acquisitions priced.”

Shares of Salix Pharmaceuticals traded recently at $155.91, down 1.2 percent.