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Valeant Is Said to Agree to Buy Salix for $10.1 Billion

(Bloomberg) -- Valeant Pharmaceuticals International Inc. agreed to buy Salix Pharmaceuticals Ltd. for about $10.1 billion, a person with knowledge of the matter said, to add gastrointestinal drugs to its stable of offerings.

Valeant will pay $158 a share in cash for Salix, the person said, asking not to be identified because the company hasn’t announced the deal. Salix shares rose $7.11 to $157.85 on Friday, almost completely eliminating any premium in the purchase price.

The deal with Salix marks a comeback for Valeant, which was thwarted last year in a long-running quest to buy Allergan Inc., the maker of Botox. Valeant is a serial acquirer, using an advantageous tax structure to make purchases and then slashing research and development costs to boost profits. Before Salix, Valeant had completed $19.2 billion of deals in the past five years, including the purchase of eye-care company Bausch & Lomb Inc. in 2013.

Valeant emerged this month with the lead offer for the assets of Dendreon Corp., a bankrupt developer of a drug for advanced prostate cancer.

Valeant has a sizable presence in Bridgewater, New Jersey, though it’s headquartered in Canada in part because of lower corporate tax rates, Chief Executive Officer Mike Pearson has said.

A Valeant spokeswoman and a Salix spokesman declined to comment.
Restated Results

Salix, based in Raleigh, North Carolina, makes drugs to treat ulcerative colitis and travelers’ diarrhea and is nearing approval for a potential treatment of irritable bowel syndrome.

The company said last month that it will restate its results for 2013 and most of 2014 after the board conducted an accounting review of how inventory of top drugs built up with wholesalers. With that move, Salix put behind it the accounting issues that kept potential acquirers at bay last year, when it was on a handful of drugmakers’ shopping lists including Actavis Plc and Allergan. Shire Plc also was interested in Salix, according to two people with knowledge of the situation.

Allergan later backed away from a deal with Salix in part because due diligence revealed the accounting problems, according to a person with knowledge of the matter. Allergan was later acquired by Actavis in a $67 billion deal.

After conducting its review, Salix will lower its reported revenue for 2013 and the first three quarters of 2014 by $20.7 million, and reduce net income over the same period by $11.9 million, the company said last week.

To contact the reporters on this story: Ed Hammond in New York at [e-mail]; David Welch in New York at [e-mail]

To contact the editors responsible for this story: Mohammed Hadi at [e-mail] Stephen West, Bernard Kohn