Valeant Goes Hostile With Cephalon Bid
Valeant said the cash offer is worth roughly $5.7 billion, and it plans to start a process next week to displace Cephalon's current board with its own nominees after being disappointed by the company's "unwillingness" to talk about a deal.
"Valeant, preferring a consensual process, has made several private approaches to Cephalon's management and board of directors, including three previous letters, which are also attached to this announcement, but has been disappointed by Cephalon's unwillingness to engage in discussions in a timely manner," Valeant said in a press release.
Cephalon shares jumped 24% to $72.89 in after-hours action on volume of 170,000, according to Nasdaq.com.Valeant said its proposal represents a 29% premium to the 30-day trading average for Cephalon's stock, which was down more than 20% in the past year prior to the surge in extended trading. The shares scraped a 52-week low of $54.15 on March 16, and were trading at a forward price-to-earnings multiple of 10.3x to the consensus fiscal 2011 earnings estimate. "We have taken a close look at Cephalon's business and believe we put forward a very compelling offer for Cephalon's stockholders," stated J. Michael Pearson, Valeant's chairman and CEO, in a press release. "We are also committed to trying to find additional value if we are allowed to conduct due diligence. That last statement would seem to hint Valeant would consider raising its offer but Pearson hedged that sentiment a bit. "To be clear, we intend to be disciplined on price as we believe we have submitted a full and fair offer for Cephalon based on the information available to us," he said. "If our offer does not have the requisite support of Cephalon's stockholders, we will focus our attention on other opportunities to invest our capital." Cephalon has yet to comment on Valeant's offer. On Monday, the company launched its own takeover bid for ChemGenex, an Australian biotech company, for $231 million. ChemGenex's lead drug candidate is a proposed treatment for chronic myeloid leukemia called Omapro.
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