Dallas, Texas 11/11/2013 (Financialstrend) – After close of business on November 7, the $2 billion market capped biotech firm Santarus, Inc. (NASDAQ:SNTS) announced that had in principal agreed to be bought out by Salix Pharmaceuticals Ltd (SLXP). The deal between the two small cap drug makers is thought to be worth around the $2.6 billion. Through the merger, Santarus aims to make its own two new drugs which are designed to treat patients suffering from gastroenterology related ailments. On the back of news of the merger, the shares of Santarus zoomed up a impressive 37% to close out trading on November 8 at $37.95 per share from its Thursday evening close price of $23.22 per share.
Industry analysts have opined that the merger / acquisition between the two companies is well thought out since their individual product buckets are complimentary in nature and helps the collective new entity compete better with larger sized companies with its increased portfolio of 22 marketable drugs. Readers should note that Salix has been active in the acquisition market over the past few years as it has been aiming to grow inorganically. The acquisition of Santarus marks the 6th such take over by Salix in the past decade.
The 42.6 billion valuations of Santarus is based on its strong portfolio of drugs specifically around diabetes and a cholesterol which already are bring in revenue to the company. In the just concluded 3Q which ended on September 30a and for which Santarus released earnings numbers on November 7. The two drugs mentined above accounted for the significant 81% increase in quarter on quarter sales compared to 3Q12.
The $2.6 billion price tag of the acquisition values each share of Santarus at $32 per share and indicates a solid 37 % premium to share holders of Santarus as per close of business price of the stock on November 7.