Valeant Pharmaceuticals International Inc. is in talks to sell its Salix gastrointestinal drugs business to Takeda Pharmaceutical Co., according to a person familiar with the matter.
The unit could go for as much as $ 10 billion and there is at least one other bidder interested, the Wall Street Journal reported earlier. The deal would include at least $ 8.5 billion in cash, the Journal said, plus future royalty payments.
If a sale is successful, the cash that comes to Valeant could reduce pressure on the debt-laden company and give it some needed breathing room during what has been a brutal year marked by a sliding stock price, legal investigations and political pressure.
The stock gained 34 percent to $ 23.86 at the close in New York, the biggest one-day gain for the shares ever. The gain reverses yesterday's slide in the stock, which fell after Bloomberg reported that U.S. prosecutors are focusing on the company's former CEO and CFO as they build a fraud case against the company, according to people familiar with the matter.
Scott Hirsch, a spokesman for Valeant, did not immediately respond to requests for comments. Linda Calandra, a spokeswoman for Takeda, said that "while we at Takeda are always evaluating opportunities, we do not speculate on industry rumors."
Salix is one of Valeant's crown jewels, and selling it would be a departure from what Chief Executive Officer Joe Papa has previously said was his plan to sell mostly non-"core" assets, though he would consider such moves at the right price. At $ 10 billion, Salix would go for less than the $ 11.1 billion Valeant paid for it after the companies struck a deal in March 2015.
Salix Assets
The Salix unit includes Xifaxan, an anti-diarrheal drug that Valeant has highlighted as its biggest single product, with $ 200 million in second-quarter sales. The unit also includes Uceris, an ulcerative colitis treatment, which had about $ 37 million in second-quarter sales. Together, the two drugs made up about 10 percent of Valeant's second-quarter sales.
Takeda has been interested before. Bloomberg reported in May that the Osaka, Japan-based drugmaker had approached Valeant about a takeover earlier in the year, and been rejected, according to people familiar with the matter.
As Valeant's shares have lost more than 90 percent of their value since a peak last year, the company has come under pressure to sell assets and pay down some of its more than $ 30 billion in debt. Two of its former executives, ex-Chief Executive Officer Mike Pearson and ex-Chief Financial Officer Howard Schiller, are a focus of U.S. prosecutors as they build a fraud case against the company that could yield charges within weeks, according to people familiar with the matter.
Papa has been working to get the company on stable footing, in part by divesting assets to pay down debt. In June, Valeant was said to be working with advisers at Morgan Stanley as it weighs the sale of dermatology units Obagi Medical Products and Solta Medical for as much as $ 500 million. Another key business is Bausch & Lomb, which makes vision care products including contact lenses.
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