An Endo spokesperson has confirmed reports from earlier today that it had made an offer to buy out Salix Pharmaceuticals. The Wall Street Journal‘s Liz Hoffman, Jonathan D. Rockoff and Dana Mattioli were the first to report on the offer.
They cited unnamed sources who said the offer was between $170 and $175 per share. Later a spokesperson for Endo confirmed in a press release that they had made an offer of $175 per share in cash and stock.
This isn’t the first time Endo tried to buy Salix, according to The Journal. Endo made an offer of $150 per share around the time Valeant offered $158 per share. Allergan had also expressed interest in purchasing Salix last year, offering $175 per share at that time even after it discovered some sort of inventory glitch.
Endo battles Valeant for Salix
Last month Salix struck a deal to be bought out by Valeant Pharmaceuticals for $158 per share or $10 billion in cash. Valeant began seeking a deal with Salix after its hostile bid to acquire Botox maker Allergan was derailed by Actavis, which won Allergan’s hand.
The two drug makers agreed to a breakup fee of $356 million if the transaction was not completed. If Endo comes between Valeant and Salix, it would probably have to pay that breakup fee, which amounts to about $5.50 per share, according to The Wall Street Journal.
Shares of all three pharmaceutical companies were affected by the news. Salix stock surged by as much as 6.44% to $167.80 per share, while shares of Valeant plunged by as much as 3.71% to as low as $194 per share. Endo shares dipped by as much as 1.1% to $88.02 per share.
Consolidation in pharmaceuticals industry continues
Valeant has gotten a lot of flak for its serial acquisitions, but the company isn’t the only drug maker to seek growth through acquisitions. Mass consolidation has been going on throughout the pharmaceuticals industry for some time. Last year alone, there were $268 billion worth of pharmaceutical acquisitions announced around the globe, reports The Journal. That’s more than twice the amount that was reported the year before, according to data from Dealogic.
This year the pace of pharmaceutical acquisitions is heating up already as well. Since the beginning of the year, drug makers have announced $65 billion worth of transactions, compared to the $39 billion reported in the first three months of 2014.
Bill Ackman goes long on Valeant
Activist investor Bill Ackman disclosed a long position in Valeant earlier this week, sending shares soaring. He had teamed up with the drug maker in its failed attempt to take over Allergan. With the purchase of about 16.5 million shares of Valeant, Ackman’s Pershing Square became the company’s fifth largest shareholder with a 4.9% stake. The drug maker made up 16.9% of Pershing’s portfolio.
A spokesperson for Valeant did not respond by time of publication. A Spokesperson for Pershing Square did not respond for request to comment.