Valeant Pharma Seeks to Take Over Cephalon for $5.7 Billion

Valeant Pharmaceuticals International Inc. (VRX), Canada’s largest drugmaker, made a hostile bid to acquire Cephalon Inc. (CEPH) for about $5.7 billion, or $73 a share in cash, after saying earlier proposals were rejected. The offer for Cephalon, the Frazer, Pennsylvania-based maker of sleep and pain drugs, presents a 24 percent premium to yesterday’s closing price of $58.75. If pursued, it would be the largest hostile takeover in the industry since Sanofi-Aventis SA bid for Genzyme Corp. last year. Cephalon’s shares rose to $72.89 after the close of the Nasdaq Stock Market. Valeant, which merged in 2010 with Biovail Corp., said on Feb. 1 that it would buy Zug, Switzerland-based PharmaSwiss SA for $480 million to expand in Europe. In January, Chief Executive Officer J. Michael Pearson said Valeant would seek acquisitions to expand its markets globally. Hostile takeovers in the drug industry are “unusual, but Valeant is an unusual company,” said Corey Davis, an analyst with Jefferies & Co. in New York, in a telephone interview yesterday. “They don’t believe in R&D, which is kind of anti- pharma. They are ultra-aggressive in acquisitions.” After several private approaches were turned back, Valeant, based in Mississauga, Ontario, will push to replace Cephalon’s board with its own nominees, the drugmaker said in a statement. “We put in an offer, tried to engage, but they wouldn’t,” Pearson said yesterday in a phone interview. “So we will go to shareholders. If they don’t like it, we will walk in a month.”