Valeant' CEO J. Michael Pearson says they will cement a deal to buy Cephalon in a matter of weeks or not at all. He says Cephalon has not engaged in talks (think Genzyme), "So we will go to the shareholders. If they don't like it, we will walk in a month."
Valeant has offered $73 per share or approximatley $5.7 billion. This represents a 29% premium over Cephalon's 30 day moving average (according to Seeking Alpha), but even at this price the deal would be accretive to Valeant.
Valeant stands to pick up Cephalon's blockbuster narcolepsy drug, Provigil, though it will reach its patent expiration in April 2012. Cepahlon also has a steady pipeline of cancer drugs, and has bolstered this further with the acquisition of Gemin X and ChemGenex in recent days. Valeant is NOT a fan of the Gemin X acquisition though as it represents an early stage buy. One could view this as a further signal (beyond not talking!) from Cephalon to Valeant that the former is not interested in being bought.
Seeking Alpha also points out that Valeant plans to make this an all cash deal with 100% financing and it shodl notbe a foregone conclusion that this financing is attainable given its weakened balance sheet. Cephalon management also has long-dated options with exercise prices as high as $76.11 - which may cause insiders to dislike deal priced at $73 with its implied low valuation.
Cephalon is in play. It is by no means a "sure-thing" that the deal will go through. Valeant will have to battle to get the deal done. See Fierce Biotech.
Posted by Bruce Lehr March 30th 2011.