UPDATED: Sorry, Endo. Valeant's back on top with $173-per-share Salix bid

Valeant CEO J. Michael Pearson

So you thought you could wrestle Salix away from Valeant, Endo? The Canadian pharma has a message for you: Think again.

CEO J. Michael Pearson's deal machine upped its original $158 per share offer for the North Carolina company to $173 per share in cash, or about $15.8 billion, forcing Endo to drop out of the running. With Salix ($SLXP) on board with the new price, Valeant ($VRX) expects to close the deal on April 1, it said Monday.

While Endo ($ENDP) last week offered $175 per share, its bid comprised cash and stock--1.4607 shares of its stock and $45 per Salix share--meaning the deal's value would fluctuate with Endo's stock price. Valeant's counterbid removed that risk, Pearson said in a statement.

"This revised offer provides Salix shareholders with all cash at a significant premium and the certainty to close by April 1," Pearson said in a statement.

Of course, that April 1 closing date isn't exactly "certain"--and Valeant built in some conditions for that exact reason. If Salix shareholders don't satisfy the minimum tender offer by April 8, Valeant's price will drop back down to $158 per share, it said.

And if Endo had managed to lure Salix away? Valeant raised its breakup fee along with its bid, meaning Salix would have been on the hook for $100 million if it had walked.

Valeant's new proposal builds on its late-February pact to buy Salix, a deal Pearson hailed as a chance to penetrate the fast-growing, "undertreated and underserved" GI market. In inking that accord, Quebec-based Valeant reportedly beat out Shire ($SHPG), rumored to be readying a bid at the time, and Endo, whose advances Salix had already turned down more than once.

Endo CEO Rajiv De Silva--FiercePharma file
Endo CEO Rajiv De Silva

But Endo--helmed by former Valeant president Rajiv De Silva, an avid dealmaker in his own right--until now refused to go away. Last week, De Silva touted a "substantially superior" transaction that came along with a seat for Salix on the combined company's board.

"While we are disappointed with this outcome, we have been and will continue to be disciplined in our approach to potential acquisitions," De Silva said in a statement Monday.

Meanwhile, reports say Valeant turned to top shareholders to finance its increased offer, including Bill Ackman's hedge fund Pershing Square. Late last year, Pearson and Ackman failed in their joint effort to buy Allergan ($AGN), losing the months-long hostile pursuit to white knight Actavis ($ACT). Earlier this month, Pershing took a nearly 5% stake in Valeant, saying it has no plans to shake things up there.

- read Valeant's release
- read Endo's release
- get more from The New York Times (sub. req.)

Special Report: Pharma's top 10 M&A deals of 2013 - Valeant/Bausch + Lomb - Salix/Santarus | The top 10 largest pharma layoffs in 2013 - Endo

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