(Reuters) - Endo International Plc offered to buy Salix Pharmaceuticals Ltd for about $11 billion in cash and stock, trumping an agreed bid by Canada’s Valeant Pharmaceuticals International Inc.
Endo said it would pay $175 per Salix share, a premium of 11 percent to the stock’s close on Tuesday.
Valeant agreed to buy the bowel drug maker in late February for about $10 billion in cash, or $158 per share.
The company is firmly committed to the all-cash agreed transaction, Valeant told Reuters on Wednesday.
If Endo’s bid goes through, Salix shareholders will own about 40 percent of the combined company, Endo said, adding that it would offer one seat on the new company’s board to Salix.
Salix said it would review Endo’s offer.
"Our objective is to publicly announce a definitive merger agreement within one week of our engagement with Salix," Endo Chief Executive Rajiv De Silva said in a letter to Salix. (1.usa.gov/1b2uOtQ)
Endo, which makes drugs that focus on pain management, had expressed interest in buying Salix on several occasions, but had been rebuffed, sources told Reuters in February.
Endo is working with its advisers to arrange financing for the deal. The company is offering 1.4607 Endo shares and $45 in cash for each share of Salix.
Endo had total debt of about $4.36 billion and cash and equivalents of $408.8 million as of Dec. 31, according to regulatory filings.
The biotech and pharma sector has seen about $60 billion in deals so far this year, the highest volume at this stage since 2009.
Last week, AbbVie Inc said it would buy Pharmacyclics Inc for about $21 billion to boost its cancer drug pipeline.
BofA Merrill Lynch and Credit Suisse Securities are Endo’s financial advisers while Skadden, Arps, Slate, Meagher & Flom is its legal adviser.
Centerview Partners and J.P. Morgan Securities are Salix’s financial advisers while Cadwalader Wickersham & Taft is its legal counsel.
Endo’s shares were down about 1 percent at $87.76 in after-hours trading, while Salix’s stock was up about 7 percent at $168.71. Valeant’s shares closed down 3.1 percent at C$247.51 on the Toronto Stock Exchange.
Additional reporting by Natalie Grover; Editing by Bernard Orr, Sriraj Kalluvila and Simon Jennings