Valeant Pharmaceuticals International, Inc. and Salix Pharmaceuticals, Ltd. have entered into a definitive agreement under which Valeant will acquire all of the outstanding common stock of Salix for $158 per share in cash, or a total enterprise value of approximately $14.5 billion.
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The transaction was approved by the boards of both companies. Salix Pharmaceuticals is has a portfolio of 22 total products, including well-known prescription brands Xifaxan, Uceris, Relistor, and Apriso, as well as a strong near- term pipeline of innovative, new assets.
"Salix's market-leading gastrointestinal franchise is an ideal strategic fit for Valeant's diversified portfolio of specialty products," said J. Michael Pearson, Valeant's chairman and chief executive officer.
Thomas W. D'Alonzo, Chairman of the Board and Acting Chief Executive Officer of Salix, stated, "We are pleased to have reached an agreement with Valeant, which is a logical partner and importantly, creates immediate value for our shareholders. Combining Salix's leading market position in gastroenterology with Valeant's scale and resources will create a stronger and more diverse business committed to providing better health solutions to health care providers and their patients."
The combination is expected to yield greater than $500 million in annual cost savings from the cost base of the combined company. Synergies are expected to be achieved within six months of close, primarily from reductions in corporate overhead and R&D rationalization, with the cost to achieve these synergies to be approximately 65%.
Valeant and Salix will determine how best to integrate the two companies to leverage the combined strengths of both while ensuring a smooth and orderly transition.
Consistent with Valeant's approach to integrating Bausch + Lomb, there are no planned reductions to Salix's highly rated specialty sales forces or hospital, key account and field reimbursement teams and we will determine the optimal size of Primary Care Sales Force through the integration process.
Valeant announced 2014 fourth quarter results with total revenue $2.3 billion; an increase of 10% over the prior year despite negative foreign exchange impact of $113 million, total same store sales organic growth of 16%, and Bausch + Lomb organic growth of 8%.
Gain of $287 million, net of fees and out-of-pocket expenses, from Allergan investment, is excluded from Cash EPS and Adjusted Operating Cash Flow. GAAP EPS was $1.56; Cash EPS $2.58 (excluding Allergan gain), an increase of 20% despite negative foreign exchange impact of $0.15 versus the prior year
GAAP Operating Cash Flow $816 million; Adjusted Operating Cash Flow was $624 million (excluding Allergan gain).
2014 full year results were total revenue $8.3 billion; an increase of 43% over the prior year; Total Same Store Sales organic growth 13%; and Bausch + Lomb Organic Growth 11%.
GAAP EPS was $2.67; Cash EPS $8.34, (excluding Allergan gain), an increase of 34% GAAP Operating Cash Flow $2.3 billion; and Adjusted Operating Cash Flow $2.5 billion (excluding Allergan gain). ■