TORONTO -- Canadian pharmaceutical giant Valeant isn't prepared to engage in a bidding war for Cephalon Inc., but will consider raising its hostile US$5.7-billion takeover bid if the U.S. company opens its books for a more detailed review.
"If Cephalon's board and management team provide us with the opportunity to do some due diligence, we would be open to sharing a piece of the upside with Cephalon shareholders and give a bump to our offer," Valeant Pharmaceuticals International chairman and chief executive Michael Pearson said Wednesday.
Cephalon (Nasdaq:CEPH) shares jumped 28 per cent in their first trading since Valeant (TSX:VRX) made its US$73-per-share offer after markets closed on Tuesday. Its US$75.44 closing price on the Nasdaq market suggests investors expect a sweeter or rival bid to emerge.
But Valeant -- a company formed from the former Biovail Corp., with major production facilities in Steinbach -- has made it clear that it won't continue to pursue the transaction, which it is financing entirely with debt, at any cost.
"If someone wants to come and pay a lot more for this company we will congratulate them and move on," Pearson said on a conference call to discuss the takeover plans.
The hostile bid by Valeant followed several attempts to negotiate a friendly deal that Cephalon's board and management rebuffed.
If successful, the Valeant offer would continue a series of multibillion-dollar mergers in the global drug industry as companies consolidate to generate efficiencies and seek new drug-development opportunities.
Valeant's bold takeover bid for Cephalon follows the mid-sized drugmaker's previously stated plan to aggressively pursue acquisition opportunities as a path to growth, rather than try to compete against bigger global rivals for development deals.
Valeant's shares gained 12 per cent, or $5.24, to close at C$48.54 on the Toronto Stock Exchange.
Valeant said the deal would create $300 million in synergies and believes Cephalon's emphasis on central nervous system and pain drugs fits well with Valeant's portfolio. Cephalon also has a generic division in Europe, which would give Valeant a bigger foothold in the growing generic drug market.
However, potential benefits of the deal are unlikely to trickle down to consumers.
-- The Canadian Press