Embattled Valeant Reportedly Spurned a Takeover Offer from Takeda and TPG
May 27, 2016
By Alex Keown, BioSpace.com Breaking News Staff
LAVAL, Quebec—In what some may have seen as “turnaround is fair play,” embattled drugmaker Valeant Pharmaceuticals (VRX), known for its aggressive growth by mergers and acquisitions strategy, rejected a takeover bid from Takeda Pharmaceuticals (TKPYY) and TPG Capital Management LP before the Joe Papa era began, Business Insider reported this morning.
Citing an unnamed source “familiar with the matter,” Business Insider said Valeant’s board wanted to give Papa time to “focus running on the company before thinking about a sale offer.” The source said Takeda and TPG believed the time for a takeover was right after Valeant’s stock plummeted nearly 90 percent since the late summer of 2015 in the wake of concerns over its debt management, accounting practices from its relationship with the specialty pharmacy company, Philidor RX Services and leadership shakeup.
It was not reported what Takeda and TPG offered for Valeant stock. After the rejection of the takeover bid, the talks between the three companies have ceased, according to reports.
But rejecting the offer may have been about more than giving Papa the time to adjust to his new role at Valeant, after he vacated his top spot at Perrigo (PRGO). Irina Koffler, an analyst from Mizuho Securities USA said many of the large Valeant shareholders are “so far underwater on their positions” that they would not want to part with the stock at this point. Koffler’s Misuho has a current “underperform” rating on Valeant stock.
“It would require a hostile offer and protracted battle to dislodge the current board, which most activists may find unattractive,” Koffler said in a note, according to the Business Insider report.
Papa was tapped to helm Valeant in April, but assumed his new role earlier this month.
“Valeant has world-class franchises, important treatments for patients across numerous therapeutic areas and a very talented and dynamic workforce, and I am confident that the company has a bright future ahead. We have an opportunity to move forward with a renewed focus on operating with integrity across all areas of the business and providing customers with safe and affordable products that improve their lives,” Papa said in a statement.
While at Perrigo, Papa led the effort to stave off a takeover by Mylan (MYL), something he called a “bad deal” for company shareholders. He also oversaw the acquisition of U.S. rights to a gastroenterology medicine Entocort from AstraZeneca (AZN) for $380 million and the acquisition of Patheon’s Mexico operations for $34 million. He also oversaw the deal to acquire Omega Pharma, which Papa said provided the company with “a pit and-European branded consumer healthcare business that is delivering greater benefits than we originally expected.”
Papa will lead Valeant’s efforts to restore its image, as well as possibly oversee divesting itself of some of its assets to control company debt. The company said it was interested in selling off non-core assets and has reportedly been approached by a number of perspective buyers. One asset that might be on the table is the irritable bowel syndrome treatment Xifaxan, which Valeant acquired last year when it snapped up Salix (SLXP). That drug could hit $1 billion in revenue this year. Other assets that could be up for sale include the company’s aesthetics products, Obagi and Solta.