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Endo said to be jousting with Valeant, Shire to win Salix

February 18, 2015
Life sciences
With Valeant and Shire already said to be prepping bids for North Carolina’s Salix, it seems there’s a third wannabe suitor, too. Word on the street is that Endo International has come calling multiple times–and though Salix has shot Endo down, it’s still not going away.
The pain management-focused company and its advisers have sent several letters to Salix, a source told Reuters. And despite rejection, Endo is still interested in tangoing with the North Carolina drugmaker.
GI specialist Salix has drawn its fair share of takeover interest in recent years. Since an inventory snafu prompted investors to push for a sale, that interest has heated up. Rumor has it that serial acquirer Valeant Pharmaceuticals–looking to hop back into dealmaking after spending most of last year on a failed pursuit of Allergan ($AGN)–has lined up the financing necessary to make an offer. And Shire, which has a plenty of cash to throw around even after last month’s $5.2 billion pact for NPS Pharmaceuticals ($NPSP), isn’t far behind.
But while those companies may be deal-minded, the complexity of an acquisition may scare them off, the news service notes. Salix’s inventory problems are broad enough that the company is reissuing financial statements covering the last 7 quarters. The issues also triggered a management shakeup and scuttled at least one potential buyout; Allergan was looking to buy Salix as a way to dodge Valeant last year, but backed off because of the inventory snafu, The Wall Street Journal reported at the time. Other fines and litigation could still be on the way.
Endo is no stranger to M&A itself. CEO Rajiv De Silva, a former Valeant exec, seems to have taken a page from Valeant chief J. Michael Pearson’s playbook, with a string of several deals to his credit last year. Those included the buyout of Ireland’s Paladin Labs that helped it complete a tax inversion.
If Endo can win over Salix, the acquisition could reshape the company, Reuters notes. The drugmaker–still struggling after losing patent protection for top-seller Lidoderm in 2013–currently boasts a market cap of $14.3 billion, and Salix’s market cap stands at $9.5 billion.
By Carly Helfand

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