Valeant Increases its Offer for Salix
Valeant Increases its Offer for Salix

Canadian pharmaceutical major Valeant Pharmaceuticals International has increased its offer for Salix Pharmaceuticals to $10.96 billion in cash.

Valeant concentrates on neurology, dermatology and infectious disease with numerous drugs in late-stage clinical trials and numerous currently on the market. Salix Pharmaceuticals develops drugs and medical devices that prevent and treat many gastrointestinal disorders.

Salix Pharmaceuticals said yes to Valeant's new offer of $173 a share. The price offered is higher compared to $158 per share in cash late last month. According to experts, it would be the largest purchase that Canada-based Valeant ever made. It would be also better for investor Bill Ackman. Ackman made an announcement last week that he had purchased over $3

It is expected that Valeant's debt will increase with this deal. Valeant is purchasing the company that in 2014 was forced to slash its full-year earnings forecast. Shares of Salix climbed 2% to $172.75 on the Nasdaq and Valeant's US-listed shares increased 2.5% to $202.34.

Valeant said that stockholders of Salix will receive about $1 billion more in cash through the new offer. It is expected that the deal will close on April 1. Valeant made the announcement about a $1.45 billion share offering and notified that it would make use of the net proceeds, with borrowed funds and cash on hand to fund the purchase. A source close to the issue informed that Valeant would not need more debt to fund the acquisition.

"It's not like it's a mature company and it really matters if the current sales are real or not", said Umer Raffat, an analyst with Evercore-ISI.

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