Market Overview

William Blair Says Cash Is King In Salix Bidding War

Share:

Valeant Pharmaceuticals Intl Inc (NYSE: VRX) is likely to prevail over a newly emerged rival in its bid to acquire Salix Pharmaceuticals, Ltd. (NASDAQ: SLXP), an analyst said Thursday.

Endo International plc - Ordinary Shares (NASDAQ: ENDP) offered Wednesday to top Valeant's earlier $10 billion all-cash agreement with a $11.2 billion deal that includes a substantial stock component.

"Cash likely remains king," said William Blair's Tim Lugo, who also said the Endo offer is burdened by bad timing.

While the Valeant deal could close within weeks, Endo's bid is unlikely to get consummated before a key regulatory ruling on Salix's Xifaxan treatment for so-called traveler's diarrhea.

Related Link: Endo Bidding $170/Share For Salix

Possible complications in the drug's approval process aren't "a trivial risk," Lugo said, noting regulatory delays dating back to at least 2011.

The heavy stock component and implied regulatory risk in Endo's bid make it unlikely to prevail, according to Lugo.

But Valeant may be forced to sweeten its $158 a share offer for Salix, which changed hands recently at $170.36, up $1.75.

Endo offered to pay 1.406 of its shares and $45 in cash for Salix, for a value of about $175 a share.

Valeant traded recently nearly unchanged at $194, while Endo gained more than 3 percent to $90.73.

Latest Ratings for VRX

DateFirmActionFromTo
Jun 2018TD SecuritiesDowngradesBuyHold
Jun 2018BarclaysUpgradesEqual-WeightOverweight
May 2018MizuhoUpgradesNeutralBuy

View More Analyst Ratings for VRX
View the Latest Analyst Ratings

 

Related Articles (SLXP + VRX)

View Comments and Join the Discussion!

Posted-In: Analyst Color Analyst Ratings

Latest Ratings

StockFirmActionPT
GNKJefferiesMaintains13.0
TDOCDA DavidsonMaintains275.0
ITRIOppenheimerMaintains127.0
CLHOppenheimerMaintains95.0
TDOCOppenheimerMaintains270.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com