November 7, 2013 / 9:26 PM / 5 years ago

Salix Pharma to buy Santarus for $2.6 billion

(Reuters) - Salix Pharmaceuticals Ltd SLXP.O will buy Santarus Inc SNTS.O for about $2.6 billion to boost its portfolio of drugs with a complementary set of products from the specialty pharmaceutical company.

The $32 per share offer is a 37 percent premium to Santarus’ Thursday close on the Nasdaq.

Santarus shares rose to $31.90 in extended trade, while shares of Salix were up 10 percent to trade at $77.99.

Both Salix and Santarus have a number of products on the market and in clinical development, but none of their target markets overlap, Salix Chief Executive Carolyn Logan said on a conference call with analysts.

The combined company will have a portfolio of 22 marketed products.

Santarus also reported third-quarter results that were well above analysts’ estimates, helped mainly by robust sales of its diabetes drug Glumetza and heartburn drug Zegerid.

Salix — which sells the traveler’s diarrhea drug Xifaxan and constipation drug Relistor — reported weak third-quarter results, but forecast better-than-expected earnings for 2013.

The company is also expecting to post solid earnings in 2014 as it looks to gain from the Santarus deal.

Salix said it expects the deal — approved by the boards of both the companies — to close in the first quarter of 2014 and to significantly contribute to earnings in the same year.

Salix expects adjusted earnings of $5 per share in 2014, up from $3.20 per share it forecast for the current year.

Analysts expect Salix to report a full-year 2013 profit of $3.24 per share, according to Thomson Reuters I/B/E/S.

Salix plans to pay for the acquisition with about $800 million in cash on hand and $1.95 billion in financing from Jefferies Finance LLC.

Jefferies LLC is advising Salix on the deal, with Covington & Burling LLP as legal counsel. Santarus is being advised by Stifel, Nicolaus & Co and Latham & Watkins LLP is its legal adviser.

Reporting by Zeba Siddiqui in Bangalore; Editing by Joyjeet Das and Anil D'Silva

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