Tuesday, November 12, 2013

The Motley Fool: Salix Scores Santarus in a Savvy Deal

Salix Pharmaceuticals (NASDAQ: SLXP  ) has long been a solid, if volatile, specialty pharmaceutical company. Salix has long relied upon its rifamycin-based drug Xifaxan for a significant percentage of its revenue (almost two-thirds as of the most recent quarter), while hoping that other approved products like Apriso and Solesta and pipeline drugs like Relistor (for opiod-induced constipation) could add both growth and diversity.

Now the company has taken a significant step forward in diversifying its revenue base and leveraging its balance sheet. Last week, Salix announced an agreement to acquire Santarus (NASDAQ: SNTS  ) for $2.6 billion in cash. The deal may look expensive at more than seven times estimated 2013 sales, but the collection of assets that Salix is acquiring should deliver above-average growth with strong synergies with Salix's existing business.

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Salix Scores Santarus in a Savvy Deal

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