NEW YORK (TheStreet) -- Shares of Salix Pharmaceuticals (SLXP) are up 1.94% to $172.68 in morning trading today as Canada's Valeant Pharmaceuticals Int'l. (VRX) increased the offer price to acquire all the outstanding common stock of Salix to $173 from $158 per share in cash, or a total enterprise value of approximately $15.8 billion.
Valeant raised its offer after rival Endo Int'l. (ENDP) surprised the markets with its own takeover bid for Salix. Endo had proposed to buy Salix for $175 a share in cash and stock, but withdrew its proposal this morning.
Endo confirmed today it is withdrawing its cash and stock proposal to acquire Salix, saying that it is moving forward with its growth strategies and active pipeline of acquisition targets across its three core platforms: U.S. Branded Pharmaceuticals, U.S. Generic Pharmaceuticals and International Pharmaceuticals.
Valeant's revised offer price of $173 per share provides about $1 billion more to the cash consideration, and represents an increase of 9.49% and 43.9%, respectively, over the original offer price of $158 per share and the unaffected price of Salix common stock on January 16 of $120.19.
As previously announced, if the minimum tender condition is satisfied at the end of the day on March 31, Valeant expects to close the transaction on April 1. If all of the conditions to the tender offer have not been satisfied by April 8, the offer price will drop back to $158 per share.
Valeant said Friday that it had plans to raise its offer for the company after Endo came in with the competing bid last week, sources told Bloomberg.
Shares of Valeant are up 2.64% to $202.65. Shares of Endo are up 2.79% to $89.77.
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 52.23%, 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 10.3%. 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