Valeant To Buy Salix Pharma In Deal Worth $14.5 Bln

(RTTNews) - Canadian drug maker Valeant Pharmaceuticals International Inc. (VRX, VRX.TO) Sunday said it agreed to buy gastrointestinal drug maker Salix Pharmaceuticals Ltd. (SLXP) in a deal worth about $14.5 billion.

Valeant also reported a fourth-quarter profit that surged from a year ago, driven largely by revenue growth and lower operating costs.

Quebec-based Valeant said it will pay $158 per share in cash for Salix, which would give the deal an enterprise value of $14.5 billion. The acquisition was approved by the boards of both companies and is expected to close in the second quarter of 2015.

Valeant said it expects to achieve cost synergies of over $500 Million from the combined company within six months. The company also anticipates the deal to be over 20 percent accretive to cash earnings in 2016.

Salix Pharmaceuticals is largely popular for its gastrointestinal products, which includes brands Xifaxan, Uceris, Relistor and Apriso. Salix is also nearing approval for a potential treatment of irritable bowel syndrome.

Commenting on the deal, Valeant CEO Michael Pearson said, "Salix's market-leading gastrointestinal franchise is an ideal strategic fit for Valeant's diversified portfolio of specialty products."

"With strong brand recognition among specialist GI prescribers, a highly rated specialty sales force, and a significant product and commercial presence across the undertreated and underserved gastrointestinal market, this acquisition offers a compelling opportunity for Valeant to create a strong platform for growth and business development," added Pearson.

The acquisition of Salix marks a return to dealmaking for Valeant after last year's failed attempt to acquire Botox maker Allergan Inc. (AGN). Irvine, California-based Allergan was later acquired in November 2014 by specialty pharmaceutical company Actavis plc (ACT) in a deal valued at $66 billion.

Valeant's fourth-quarter profit rose to $534.9 million or $1.56 per share from $123.8 million or $0.36 per share last year.

Adjusted earnings for the quarter improved to $2.58 per share from $2.15 per share last year. Analysts polled by Thomson Reuters estimated earnings of $2.55 per share for the quarter. Analysts' estimates typically exclude one-time items.

Total revenues for the quarter rose 10 percent to $2.28 billion from $2.06 billion last year. Analysts had a consensus revenue estimate of $2.22 billion for the quarter.

Operating costs dropped to $1.64 billion from $1.84 billion last year.

Looking forward to the first quarter, Valeant expects adjusted earnings of at least $2.30 per share and same store organic growth of 10 to 15 percent. Analysts currently estimate earnings of $2.22 per share for the quarter.

"Outstanding growth in the U.S., most notably dermatology, offset the negative impact from foreign exchange. In addition, we continued to see strong organic growth in several emerging markets such as China, the Middle East and Russia. With our strong finish to the year, we are well positioned for another year of outperformance in 2015," Pearson said.

VRX closed Friday's regular trading at C$217.41, on the Toronto Stock Exchange. SLXP closed Friday's trading at $157.85, on the NYSE.