February 13, 2015 / 9:07 PM / 2 years ago

Exclusive: Drugmaker Endo vying for Salix takeover: source

3 Min Read

(Reuters) - Endo International Plc (ENDP.O) has expressed interest multiple times to buy Salix Pharmaceuticals Ltd SLXP.O but has been rebuffed by the U.S. maker of bowel drugs, according to a person familiar with the matter.

Endo, which makes drugs that focus on pain management, and its advisers have sent several letters to the company, and it remains interested in a potential takeover, said the person, who asked not to be identified because the deliberations are confidential.

Representatives for Endo and Salix could not immediately be reached for comment.

Valeant Pharmaceuticals International (VRX.TO) and Shire Plc (SHP.L) have also taken steps toward a bid for Salix, sources previously told Reuters. Salix has a market capitalization of $9.5 billion.

Valeant and Shire could ultimately decide against a bid, given the complexity of any deal.

Salix is working with advisers to consider its options in the midst of a management shakeup and inventory issues.

Last November, Salix announced that supply levels for its irritable bowel syndrome drug, Xifaxan, and other drugs were higher than it had previously indicated, forcing it to slash its full-year earnings forecast.

While Salix last month resolved an accounting problem related to its inventory issue, the company may still face other fines and litigation that could stymie a potential deal, the sources previously said. Shares fell 37 percent the day the company disclosed its inventory issue.

Salix Chief Executive Carolyn Logan also stepped down last month following the departure of other top executives.

The company said in late January it would restate financial statements for all of 2013 and the first three quarters of 2014.

A deal for Salix would be transformative for Endo, which has a market capitalization of $14.3 billion. Helmed by former Valeant executive and serial dealmaker Rajiv De Silva, Endo last October agreed to acquire Auxilium Pharmaceuticals Inc AUXL.O for $2.6 billion for its men's health drug portfolio.

Endo also acquired generic drugmaker Dava Pharmaceuticals for $600 million last June. A $1.6 billion acquisition of Canadian specialty drugmaker Paladin Labs last year allowed the company to relocate to Ireland, where corporate tax rates are lower, in a so-called inversion deal.

Reporting by Mike Stone and Olivia Oran in New York; editing by Meredith Mazzilli and Matthew Lewis

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