Valeant trumps Endo with $10.96 billion bid for Salix Pharma

(Reuters) - Valeant Pharmaceuticals International Inc increased its takeover offer for Salix Pharmaceuticals Inc to $10.96 billion in cash on Monday, bumping out Endo International Plc , the only other bidder for the maker of gastrointestinal drugs.

Salix has agreed to Valeant's new offer of $173 in cash, which is higher than Valeant's previous bid of $158 per share in cash, which was made late last month, the two companies said in a joint statement.

Salix would be the largest purchase ever made by Canada-based Valeant, whose growth has long been fueled by acquisitions and cost-cutting. The acquisition would offer some redemption for dealmaking Valeant Chief Executive Michael Pearson, whose hostile bid for Allergan Inc failed last year.

It would also be a boost for investor Bill Ackman, who announced last week he had bought a more than $3 billion stake in Valeant after having worked with the company on the Allergan bid.

Even so, the deal would sharply raise Valeant's debt, and it is buying a company that last year was forced to slash its full-year earnings forecast after supply levels for certain drugs were higher than earlier indicated.

The short bidding war for Salix pitted Valeant's Pearson against his former protege, Endo Chief Executive Rajiv De Silva, a top executive at Valeant until 2012.

Salix shares rose 1.9 percent to $172.60 on the Nasdaq on Monday, while Valeant's U.S.-listed shares rose 3.3 percent to $204.

Endo shares gained 1.9 percent on the Nasdaq to $89.

Ireland-based Endo said in a statement that while it is disappointed to lose Salix, it has other potential deals and research and development on which to focus.

Endo offered last Wednesday to buy Salix a deal that was worth about $175 per share in cash and stock. As of Friday's close, Endo's offer was worth $172.56 per share.

Valeant's new offer provides Salix stockholders with about $1 billion more in cash, Valeant said. It said the deal was expected to close on April 1.

Endo, which makes drugs that focus on pain management, had expressed interest in buying Salix on several occasions, but had been rebuffed, sources told Reuters in February.

Valeant's new offer is based on Salix's 63.33 million shares outstanding as of Feb. 23, according to Thomson Reuters data.

Valeant said its bid gives Salix an enterprise value of about $15.8 billion.

(Reporting by Ankur Banerjee in Bengaluru and Rod Nickel in Winnipeg, Manitoba, additional reporting by Caroline Humer in New York; Editing by Savio D'Souza and Peter Galloway)