Valeant Places Third Largest High-Yield Bond Offering Ever: Report

(RTTNews) - Valeant Pharmaceuticals International Inc (VRX, VRX.TO) on Friday said it has priced a four-part offering of high-yield bonds totaling $10.1 billion for its proposed $14.5 billion acquisition of Salix Pharmaceuticals (SLXP).

The $10.1 billion senior unsecured notes offering by Valeant is the third-largest high-yield deal on record, according to Forbes. The notes comprise two eight-year dual-currency tranches and a 10-year tranche.

Valeant also said the notes offering has been upsized to about $10.1 billion from the previously announced $9.6 billion.

As a result of the increased size of the notes offering, Valeant intends to incur $400 million less in incremental term loans in connection with Salix deal.

Valeant said it expects to close the notes offering on or about March 27.

In February, Valeant agreed to buy gastrointestinal products maker Salix for $158 a share in cash. The deal has an enterprise value of $14.5 billion.

But the deal was jeopardized after Endo International (ENDP) recently jumped into the fray with a superior offer of $175 per share in cash and stock, or $11 billion. Salix said it would review the Endo offer and its shares surged.

Valeant said that if it does not consummate the Salix deal on or prior to August 20, if the deal with Salix is terminated or if it determines that the tender offer will not be pursued, Valeant would be required to redeem the notes at 100 percent of the issue price of the notes, plus accrued and unpaid interest to, but excluding, the redemption date.

Valeant is banking on the acquisition of Salix after last year's failed attempt to acquire Botox maker Allergan Inc (AGN), which has since agreed to a $66 billion merger with Actavis (ACT).

Meanwhile, Bill Ackman, the hedge fund manager who has a significant stake in Valeant, has advised his "friends" to desist from buying shares of Salix at $170, CNBC said. The warning comes after Salix shares surged on the Endo bid for Salix.

According to CNBC, Ackman believes that Valeant is not going to overpay for Salix; Salix will prefer to close a deal soon and this is something that Valeant offers, while a deal with Endo would take weeks.