William Blair Says Cash Is King In Salix Bidding War
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.
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
|Dec 2016||Morgan Stanley||Downgrades||Overweight||Equal-Weight|
|Nov 2016||Morgan Stanley||Maintains||Overweight|
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.