MONTREAL -- Valeant Pharmaceuticals shares jumped to an all-time high Monday in the first trading since the Quebec-based company announced the largest acquisition in its history, a US$10-billion friendly cash offer for Salix Pharmaceuticals.
On the Toronto Stock Exchange, Valeant's shares peaked at C$252.60 early Monday. They gave up some gains but were up nearly 14 per cent or $30.29 at $247.70 in later morning trading.
Valeant is offering US$158 per share cash for the North Carolina-based company, which is focused on gastrointestinal products. Including Salix's debt and cash on hand, the deal is worth US$14.5 billion.
On the Nasdaq market, Salix shares traded at US$156.06 at midmorning.
CEO Michael Pearson says the Salix transaction, and a prior deal set to close Monday for oncology drugmaker Dendreon, expands the type of potential targets the company will be seeking in future acquisitions.
Salix and Dendreon are the first major transactions since Valeant failed in its hostile bid last year for Botox maker Allergan, which was acquired by Ireland-based Actavis. Despite the failing to acquire Allergan, Valeant pocketed a net gain of US$287 million after selling its shares in Allergan.
It expects that the transaction will contribute modestly to Valeant's 2015 cash earnings per share, but projects a 20 per cent boost in 2016. The company is banking on the U.S. Food and Drug Administration granting approval for Xifaxan to treat irritable bowel syndrome with diarrhea.
Valeant's net income surged to US$534.9 million or $1.56 per diluted share in the fourth quarter, compared with US$123.8 million, or 36 cents per share, a year earlier. Revenue jumped 10 per cent to US$2.3 billion despite a negative foreign exchange impact of $113 million.
Excluding one-time charges including $47 million in restructuring charges, it earned US$880.7 million or $2.58 per share, three cents above its prior guidance.
