NEW YORK (TheStreet) -- Shares of Salix Pharmaceuticals (SLXP) closed down 0.38% at $169.40 as Valeant Pharmaceuticals Int'l. (VRX) reportedly plans to raise its offer for the company after Endo Int'l. (ENDP) came in with its own offer earlier this week, sources told Bloomberg.
Valeant will increase its proposal to more than $160 a share from its initial offer of $158 per share in cash, the source said, adding that the Canadian company will put the offer to Salix's board before a meeting this weekend.
Endo surprised the markets after it made a takeover offer for the Salix earlier this week, seeking to wrest it from Valeant. Endo proposed to buy Salix for $175 a share in cash and stock.
"We doubt that Valeant will lose Salix to Endo," BMO Capital Markets said in a note. Jefferies noted that while Endo's offer was higher it was made up of 25% cash and 75% equity in contrast to Valeant's all-cash offer.
Salix would also face a $356.4 million termination fee if it backs away from the agreement with Valeant, on top of up to $50 million to cover Valeant's "out-of-pocket expenses," according to Reuters.
Separately, Valeant Pharmaceuticals announced today, just before the closing bell, that it has received early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to the proposed acquisition.
The expiration of the waiting period satisfies one of the conditions to consummate the tender offer and Valeant expects to be in the position to close the transaction April 1.
Shares of Valeant are down 0.99% to $195.48 in after-hours trading. Shares of Endo are slightly up 0.02% in after-hours.
Separately, TheStreet Ratings team rates SALIX PHARMACEUTICALS LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SALIX PHARMACEUTICALS LTD (SLXP) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid stock price performance. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, SLXP's share price has jumped by 37.62%, exceeding the performance of the broader market during that same time frame. Although SLXP had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- SLXP, with its very weak revenue results, has greatly underperformed against the industry average of 10.4%. Since the same quarter one year prior, revenues plummeted by 94.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- SALIX PHARMACEUTICALS LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SALIX PHARMACEUTICALS LTD swung to a loss, reporting -$6.52 versus $2.14 in the prior year. This year, the market expects an improvement in earnings ($3.91 versus -$6.52).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Pharmaceuticals industry. The net income has significantly decreased by 650.4% when compared to the same quarter one year ago, falling from $52.26 million to -$287.65 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, SALIX PHARMACEUTICALS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: SLXP Ratings Report