A drugmaker linked to Irvine-based Allergan Inc. during its successful fight against an unsolicited takeover bid last year is set to be acquired by the same suitor: Valeant Pharmaceuticals International Inc. in Canada.
Valeant said late last month that it would pay about $10.1 billion in cash for Salix Pharmaceuticals Ltd., a Raleigh, N.C.-based maker of gastrointestinal drugs, such as the Xifaxan antibiotic, which is awaiting a Food and Drug Administration decision on its use in treating irritable bowel syndrome.
The buy is expected to close in the second quarter.
Salix’ gastrointestinal drugs are “an ideal strategic fit for Valeant’s diversified portfolio of specialty products,” said Valeant Chief Executive J. Michael Pearson.
“With strong brand recognition among specialist [gastrointestinal] providers, a highly rated specialty sales force and a significant product and commercial presence across the undertreated and underserved gastrointestinal market, this acquisition offers a compelling opportunity for Valeant to create a strong platform” for growth and business development, Pearson said.
Salix’ name first came up with Allergan in September when news reports surfaced that the Botox maker was in “advanced talks” with Salix as it sought to beat back Valeant’s hostile takeover attempt made in concert with activist investor Bill Ackman and his Pershing Square Capital Management LP.
Allergan, however, backed off from its pursuit of Salix and was ultimately acquired by Actavis PLC in a deal currently worth about $71 billion.
A few weeks before the Allergan-Actavis deal announcement, Salix’ shares dropped 35% and lost about $3 billion in market value in the wake of reported operating losses and questions about its inventory reporting.
The inventory imbroglio led to an audit, a shareholder suit, and the retirement of Salix Chief Executive Carolyn Logan and the resignation of Chief Financial Officer Adam Derbyshire.
Valeant’s debt load, which was an issue in its Allergan pursuit because it could have thwarted financing for the buy, will double to about $31 billion if the Salix deal goes through.
Wall Street, however, focused on things such as Salix’ portfolio and corporate issues.
UBS Securities’ Marc Goodman wrote in a client note that he liked “the growing Salix products, which have solid reimbursements [from insurers] and the overall gastrointestinal therapeutic category, which continues to grow nicely.”
Valeant’s offer for Salix “confirms our view that Salix inventory management issues were, essentially, poor and undisciplined business practices that could easily be remedied and were not suggestive of broader and deeper issues of corporate malfeasance,” analyst David Amsellem of Minneapolis-based Piper Jaffray said in a note on the deal.
Device Maker Grows in Irvine
Irvine-based Freedom Innovations LLC is building a 3,500-square-foot manufacturing facility and plans to hire 30 more workers to support its growth.
Freedom is a developer, maker and distributor of technologically advanced prosthetic devices for lower-limb amputees. Its products include fixed-ankle prosthetic foot systems and knee products.
The company has 152 employees. It also has a manufacturing and distribution facility in Gunnison, Utah, and a sales and marketing distribution center in the Netherlands.
Separately, Freedom named Achilleas Dorotheou and Christa Kreuzburg to its board of directors. Dorotheou is vice president and head of the human motion and control business unit of Cleveland-based Parker Hannifin Corp., whose aerospace unit employs more than 1,700 in Irvine.
Parker Hannifin made a minority investment in Freedom in December. The amount of the investment was not disclosed.
Kreuzburg’s experience includes serving in a variety of leadership positions with Bayer HealthCare, a unit of Germany-based diversified health company Bayer AG.
Inari Gets New CEO
Irvine-based startup Inari Medical hired Bill Hoffman as its new chief executive.
He replaces Bob Rosenbluth, a cofounder of Aliso Viejo-based medical device incubator Inceptus Medical LLC.
Inceptus established Inari in 2013.
Inari is developing devices to treat vascular thrombosis and emboli.
Hoffman was most recently president and chief executive of Houston-based Visualase Inc., which Ireland-based Medtronic PLC (then known as Medtronic Inc.) bought last July.
