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The headquarters of Valeant Pharmaceuticals, seen in Laval, Que. (CHRISTINNE MUSCHI/REUTERS)
The headquarters of Valeant Pharmaceuticals, seen in Laval, Que. (CHRISTINNE MUSCHI/REUTERS)

Takeda talks to buy Valeant’s Salix stalls, sources say Add to ...

Takeda Pharmaceutical Co. Ltd.’s negotiations to acquire Valeant Pharmaceuticals International Inc.’s Salix stomach-drug business have stalled over price disagreements, people familiar with the matter said on Wednesday.

Shares of Valeant were down more than 7 per cent at $21.24 on Wednesday after the Wall Street Journal reported that the talks had broken down. A deal for Salix would help Valeant trim the large debt pile it accumulated through aggressive acquisitions.

Valeant had said on Nov. 1 that it was in talks with several parties about selling Salix. But on Tuesday, the Canadian company said it was expanding its sales force for Salix’s key product, Xifaxin, among other drugs, suggesting plans to keep the business for the long term.

The sources asked not to be identified because the negotiations are confidential. Valeant and Takeda declined to comment.

Previous reports said that a sale of Salix could raise as much as $10-billion for Valeant, which has been struggling under a roughly $30-billion debt load after repeatedly slashing earnings expectations.

Valeant’s stock has declined more than 90 per cent in the past year, erasing nearly $90-billion in market capitalization, over disclosures that it secretly worked with a specialty pharmacy to boost sales of its medicines. The company is the subject of multiple investigations by federal agencies and state prosecutors.

Salix Pharmaceuticals makes treatments for disorders such as irritable bowel syndrome and diarrhea.

Valeant’s new chief executive officer, Joseph Papa, has committed to selling around $8-billion in non-core assets to help pay down debt that it accumulated over the course of a series of large acquisitions.

Takeda tried earlier this year to buy Salix as part of a joint bid with private equity firm TPG, a few weeks before Mr. Papa took over as CEO. But Valeant’s board rejected the offer as it wanted to give Mr. Papa time to map out a course for the company.

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