|Endo CEO Rajiv De Silva|
Last month, some industry watchers speculated that the low price Valeant ($VRX) agreed to pay for North Carolina's Salix Pharmaceuticals ($SLXP) could leave room for other bids. And now, one has arrived, courtesy of Endo International ($ENDP)
Endo CEO Rajiv De Silva sent an offer letter on Wednesday to Salix's board, offering $175 per share in cash and stock. That's quite a bit more than the $158-per-share price Valeant put forth when it inked its pact for Salix last month--and De Silva argues it would make a "substantially superior" transaction, too.
Under the proposal, Endo would fork over 1.4607 shares of its stock and $45 per Salix share--a 11% premium to Valeant's offer, according to De Silva. And if Endo's offer goes through, Salix can help itself to a seat on the combined company's board, he promised.
This isn't Endo's first attempt to snag Salix. Before Valeant made its offer, Reuters reported that the pain management-focused company and its advisers had sent several letters to the GI specialist to no avail.
|Valeant CEO J. Michael Pearson|
While Endo is no Valeant when it comes to a dealmaking track record, De Silva is Valeant's former president, and lately he seems to have taken a page from CEO and serial acquirer J. Michael Pearson's playbook. Endo's string of deals last year included one for Ireland's Paladin Labs, which helped Endo complete a tax inversion.
And if Endo can ultimately lure Salix away from Canada-based Valeant, the tie-up could reshape the company. Still reeling after losing its IP shield for top product Lidoderm in 2013, Endo currently boasts a market cap of more than $15 billion, while Salix's checks in at more than $10.5 billion.
"The combined company will be a leader in specialty pharmaceuticals--a top-tier company in the sector in terms of organic growth rate, enterprise value, and margin profile," De Silva wrote.
First though, Endo might have to endure a bidding war. On the other hand, Valeant prides itself on its disciplined dealmaking; it cited that self-restraint last November as Actavis ($ACT) snatched up longtime hostile target Allergan ($AGN) for $66 billion, a price Pearson said he "couldn't justify."
- read the letter (PDF)
- and Endo's press release
Special Report: Pharma's top 10 M&A deals of 2013 - Valeant/Bausch + Lomb - Salix/Santarus | The most influential people in biopharma today - J. Michael Pearson - Valeant | The top 10 largest pharma layoffs in 2013 - Endo