Valeant Pharmaceuticals International Inc., the drug maker in a bidding war to purchase Salix Pharmaceuticals Ltd., raised $10.1-billion from the largest junk-bond sale in almost a year.
The notes, boosted from $9.6-billion, were sold in four parts Friday, according to a company statement. The portion with the longest maturity, which also tied for the biggest slice, consisted of $3.25-billion in 6.125 per cent, 10-year bonds that yield 4 percentage points more than comparable Treasuries, according to data compiled by Bloomberg. That's 0.62 percentage point less than the premium paid on all junk bonds, according to a Bank of America Merrill Lynch Index.
Valeant, which agreed last month to pay $158 a share, or $10.1-billion, for Salix, is facing a rival bid from Endo International PLC, which earlier this week offered $175 per share. Valeant said it will redeem the bonds in full if it's unable to complete the purchase by Aug. 20, 2015.
"Valeant will get the deal for Salix," said Mark McCabe, a credit analyst at KDP Asset Management Inc. "It's a bigger company and has a track record of smoothly integrating acquisitions."
The junk-bond sale is the largest since billionaire Patrick Drahi's Numericable-SFR and Altice SA sold $16.6-billion of debt in April, Bloomberg data show. Valeant is also raising bank loans to fund the purchase, Bloomberg data show.
Excluding Salix, which would be Valeant's biggest purchase, the drug maker has completed $19.2-billion of deals in the past five years, including the acquisition of eye-care company Bausch & Lomb Inc. in 2013, Bloomberg data show.
Valeant was thwarted by Actavis PLC last year in a long-running quest to buy Botox-maker Allergan Inc.
Moody's Investors Service rates Valeant Ba3, three levels below investment grade. Standard & Poor's gives the company an equivalent double-B-minus grade.
Valeant's stock has gained 39 per cent over the past year, nearly quadrupling the 11-per-cent gain of the Standard & Poor's 500 Index, Bloomberg data show.