The shares of Valeant Pharmaceuticals International (NYSE:VRX) (TSE:VRX) are trading higher following a report that it rejected a takeover approach from a group led by Takeda Pharmaceutical (TYO:4502).
Valeant’s stock price climbed more than 7% to $28.91 per share in New York and more than 8% to CAD$37.75 per share in Toronto, around 2:33 in the afternoon on Friday.
No ongoing negotiations
Takeda Pharmaceutical approached Valeant regarding a potential deal about six weeks. However, the Canadian pharmaceutical company turned it down and there is no on-going discussion between the companies, according to Bloomberg based on people familiar with the situation.
On Thursday, the Wall Street Journal reported that the Japanese pharmaceutical company partnered with TPG Capital on the takeover bid for Valeant. The report indicated that the firms approached the Canadian pharmaceutical company prior to the appointment of Joseph Papa as Chairman and CEO.
Papa was brought in to help revive Valeant amid investigations regarding its business model and drug pricing practices—the primary reasons behind the significant decline of its stock price.
The Canadian pharmaceutical company’s stock dropped from its highest price of $263.81 per share to as slow as $23.55 per share over the past 52 weeks. The stock is down more than 71% year-to-date based on data from Google Finance.
Papa says Valeant has a very good pipeline”
During the UBS Global Healthcare Conference in New York on Monday, Papa said Valeant has a “very good pipeline” of new drugs that are not yet fully appreciated.
He added that he spent his first few weeks at the company getting acquainted with sales staff and understanding the debt holders of the company. Valeant has more than $30 billion of bonds and loans. It is critical for him as CEO to understand the company’s creditors.
Market observers suggested that Takeda Pharmaceutical is interested to acquire Valeant because it has a portfolio of gastrointestinal treatments—which is the focus area of the Japanese company.
CEO Christophe Weber repeatedly expressed his ambitions for Takeda Pharmaceutical to become a global leader in providing oncology and gastrointestinal treatments. He also wants to develop new drugs to sell worldwide.