Sector News

Endo’s shown it’s willing to spend. But with Salix gone, what’s left worth buying?

March 17, 2015
Life sciences
As Endo showed last week with its failed $10 billion bid for North Carolina’s Salix, it’s willing to shell out some serious dough if the right target comes along. The question is, what’s left?
Not much in that price bracket, the way Morningstar analyst Michael Waterhouse sees it. Salix was “kind of that last low-hanging fruit sitting out there,” he told Bloomberg. “There are still a lot of small companies out there that they’ll continue to look for but it’s definitely becoming a much more crowded buyers’ market.”
Indeed, after losing Salix to Valeant –which ponied up $173-per-share in cash, compared with Endo’s $175-per-share in cash and stock–the Ireland-based company may have to duke it out with other dealmakers down the line. In addition to serial buyer Valeant, companies like Shire and Pfizer are reportedly still on the hunt.
The good news for Endo, though, is that it’s “casting a pretty wide net,” Piper Jaffray analyst David Amsellem told the news service. The company could try building out its pain-management business–perhaps with a buyout of $750 million partner BioDelivery Sciences, or, further down the line, a merger with fellow Irish countryman Mallinckrodt, worth about $15 billion. Another target could be $3 billion Impax Labs, Gabelli & Co. analysts suggested–as could smaller players around the globe.
“If you looked not just in North America but overseas, there are many private companies and many small companies that many in the broader investment community have never heard of,” Amsellem said. “But you can rest assured that Endo has heard of them.”
That’s not necessarily surprising, considering CEO Rajiv De Silva’s resume. The helmsman previously served as president at Valeant, and since joining Endo he seems to have taken a page from that company’s playbook. De Silva struck up a string of deals last year, including pickups of Paladin Labs–which helped it complete its tax inversion–and Canada’s Auxilium, a $2 billion-plus tie-up that closed this January.
By Carly Helfand

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