Valeant goes hostile with $5.7 billion offer to buy Cephalon

Having itself made two acquisition moves in the last two weeks, US drugmaker Cephalon (Nasdaq: CEPH) last night became the subject of a hostile takeover bid from Canada’s largest drug firm, Valeant Pharmaceuticals International (TSX: VRX).

Valeant is offering to buy Cephalon for around $5.7 billion, or $73 a share, which it says is a premium of around 29% over Cephalon's 30-day trading average. Valeant said it preferred a consensual process, but has been disappointed by Cephalon's unwillingness to engage in discussions in a timely manner. Cephalon shares rose 24% to $72.89 in extended trading after the Valeant bid was announced, while the Canadian company climbed 10% to 48.96 on the New York Stock Exchange.

"We have taken a close look at Cephalon's business and believe we put forward a very compelling offer for Cephalon's stockholders," stated Michael Pearson, chairman and chief executive of Valeant. "We are also committed to trying to find additional value if we are allowed to conduct due diligence. Given the importance of this transaction proposal to shareholders of both companies, and given that Cephalon's management continues to pursue strategies that in our view reduce the value of a merged entity, we have decided to make our proposal public. We believe this will enable the Cephalon stockholders to determine for themselves whether their board and management should engage with Valeant in a meaningful and productive dialogue regarding our proposal," he explained.