Valeant Pharmaceuticals International, Inc. VRX announced that it has priced its previously announced share offering at $199.00 per share.
The company will issue 7,286,432 common shares and raise approximately $1.45 billion. The offer will close by Mar 27, 2015.
Meanwhile, Valeant has granted the underwriter of the offering the option to purchase additional common shares equal to up to 15% of the common shares initially sold. The option can be exercised for a period of 30 days following the date of the final prospectus supplement.
Valeant expects to use the net proceeds from the share offering along with its existing loan facilities to fund the recently announced acquisition of Salix Pharmaceuticals SLXP along with the repayment of the latter’s debt. The remaining proceeds, if any, will be used for general corporate purposes, including acquisitions and debt repayments.
We note that Valeant has recently upped its offer to acquire Salix for $173.00 per share or a total value of $15.8 billion compared to the original offer of $158.00 per share or $14.5 billion.
The revised offer came after Endo International plc ENDP proposed to acquire all outstanding shares of Salix’s common stock in a stock-and-cash deal valued at $175.00 per Salix share on Mar 11, 2015. However, Endo has now withdrawn its offer.
Salix is a leader in the gastrointestinal (GI) market with a wide variety of drugs such as Xifaxan 550 (for reducing the risk of recurrence of overt hepatic encephalopathy in adults), Uceris (for controlling mild-or-moderate ulcerative colitis), Relistor (for opioid-induced constipation) and Apriso (for ulcerative colitis).
Meanwhile, Valeant expects to close the transaction on Apr 1, 2015 if the minimum tender condition is satisfied by Mar 31. However, the offer price will revert to the original price if all conditions of the tender offer are not fulfilled by Apr 8.
Valeant has been quite aggressive on the acquisition front since the last two years, which contributed to its solid growth. We expect investor focus to remain on further updates from the company on the acquisition proposal.
Valeant currently carries a Zacks Rank #2 (Buy). Novo Nordisk NVO is another favorably placed stock, carrying the same Zacks Rank as Valeant.
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