Salix Pharmaceuticals Jumps on Takeover Rumours by Allergan - Analyst Blog

A generic image of coins in front of a stock chart.
Credit: Shutterstock photo

Salix Pharmaceuticals Ltd. ( SLXP ) shares surged 15.5% after The Wall Street Journal claimed that Allergan Inc. ( AGN ) has approached Salix to acquire it. Salix also touched a 52-week high of $162.38 during the trading session on Aug 19.

The Wall Street Journal also claimed that Allergan's decision to bid for Salix is to hinder Valeant Pharmaceuticals International Inc.'s ( VRX ) proposal to acquire Allergan.

Salix has several products in its portfolio. Salix's lead product, Xifaxan performed disappointingly in the second quarter. Sales of the drug declined 6.7% year over year to $140.5 million. Salix also has Relistor and purgatives like MoviPrep, OsmoPrep and Apriso in its portfolio. The company also boasts of a strong pipeline.

Salix's position in the gastrointestinal market was strengthened in Jan 2014, when it acquired Santarus Pharmaceuticals. The acquisition added products like Zegerid, Uceris and Glumetza.

We note that in Jul 2014, Salix inked a merger agreement with Cosmo Technologies Ltd., which is expected to close in the fourth quarter of 2014. The company will enjoy lower tax rates on licensing agreements to be signed in the future due to a change of base, a strategy adopted by many healthcare companies in the recent past (read more: Salix-Cosmo to Merge in Tax-Saving Deal ).

Investors will wait to see how the boards of both Allergan and Salix react to the rumour. Even if Allergan bids for Salix, the question still remains as to whether Cosmo Technologies will be a part of the deal.

Salix presently carries a Zacks Rank #3 (Hold). Other well-ranked stocks in the health care sector include Endo International ( ENDP ) sporting a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ENDO INTL PLC (ENDP): Free Stock Analysis Report

ALLERGAN INC (AGN): Free Stock Analysis Report

VALEANT PHARMA (VRX): Free Stock Analysis Report

SALIX PHARM-LTD (SLXP): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

    Learn More