Cephalon Being Acquired By Valeant Pharma
United States based Cephalon Inc. (NASDAQ:CEPH) has been offered a $5.7 billion hostile bid offer by Canadian based Valeant Pharmaceuticals International Inc. (NYSE:VRX)
The Canadian based drug maker who manufactures dermatology and neurology based drugs, made a hostile bid to acquire Cephalon Inc. at $73 per share on Tuesday. The offered price is 24 percent premium to the price of the shares being traded on the New York Stock Exchange before the hostile bid was made. The shares of the company rose to close at $72.89 per share after the announcement of the deal was made.
Valeant is currently the largest pharma company in Canada. It merged last year with Biovail Corp. to take the number one position from number three. According to plans by Valeant, it aims to replace the current board members of Cephalon with members of its own after the acquisition is complete. Valenat said in its statement that it has made many attempts to approach the company privately to discuss the acquisition. It was received with unwillingness to the possible discussion of a merger.
The Chief Executive Officer of Valean, J. Michael Pearson said that they will approach the shareholders and will provide a month’s time if necessary.
Goldman Sachs Group Inc. will fund the fully debt paid transaction, for which the financial institution has provided the Valeant Pharma a letter the assures that full amount required for the transaction will be made. According to company’s bank balances in 2010, the company has more than $400 million in cash and marketable securities.
The $5.7 billion being offered by Valeant for Cephalon is 5.5 times more than that of the company’s earnings before interest, taxes, depreciation and amortization. There hace been more than 219 acquisitions in the last 12 months in Untied States, which have an average disclosed price of $153.7 million at an average premium of around 44 percent.
Cephalon has recently replaced its Chief Executive Officer with J. Kevin Buchi after the death of Fran Baldino, the company’s founder in December. The company is majorly into the production of drugs for pain and sleep, with total reported revenue in 2010 above $2.81 billion. The company also sells Provigil for the treatment of narcolepsy along with various drug developments for the treatment of inflammatory diseases, pain and cancer currently in the pipeline.
Recently Sanofi-Aventis completed its hostile bid acquisition of the world largest rare diseases drug maker, Genzyme (NASDAQ:GENZ) in a 9 month long bidding war. It is not known how long will this bid take to be accepted by the shareholders of Cephalon.
