Raleigh-based Salix Pharmaceuticals (Nasdaq: SLXP) has agreed to be acquired by Canadian drugmaker Valeant Pharmaceuticals in a deal valued at some $14 billion.

The boards of both companies have already agreed to the terms, which were announced Sunday.

If the deal wins regulatory approval, it would end a tumultuous six month period for Salix. The company appeared to be en route to a $10 billion acquisition by Botox-maker Allergan in September, but that deal fell through due to a huge problem of excessive Salix product inventory.

At that time, Salix shares hit a record high of $172.98 a share. The company employs some 550 people.

WTW coverage of Salix over last 6 months:

  • Sale won’t end turmoil at Salix in short term
  • Long-time CEO Carolyn Logan retires
  • Salix grilled over inventory problems
  • Salix calls off $2.7 billion merger
  • Salix target of possible $10B acquisition

However, the inventory disclosure sent shares plummeting to a low of $91.47 on Nov. 7. 

Salix also had planned to acquire an Italian firm, Cosmo, in October for $2.7 billion but that deal was called off due to concerns about changes in U.S. tax policy.

Long-time Salix CEO Carolyn Logan retired as of Jan. 30. The firm’s CFO left the firm in November after the disclosure of the inventory problem.

Salix, which operates its headquarters in North Raleigh, focuses on treatments for gastrointestinal diseases. 

 “We are pleased to have reached an agreement with Valeant, which is a logical partner and importantly, creates immediate value for our shareholders,” said Salix board chairman and acting Chief Executive Officer Thomas D’Alonzo, in a statement.

 “Combining Salix’s leading market position in gastroenterology with Valeant’s scale and resources will create a stronger and more diverse business committed to providing better health solutions to health care providers and their patients. We are proud of the accomplishments of our Salix team. Together, we have built our company into the leading gastrointestinal specialty pharmaceutical company, providing solutions for patients and healthcare providers. We look forward to working with the Valeant team to ensure a smooth transition.”

The deal amounts to about $158 for each of Salix’s outstanding shares.
    
That’s just above Salix’s closing price of $157.85 per share on Friday.
    
With debt, the deal is valued at $14.5 billion.
    
The deal is a win for Valeant, which made several offers to buy Allergan last year, but was repeatedly rebuffed by the Botox-maker. Allergan agreed to be acquired by Ireland-based Actavis in November.
    
In 2013, Valeant acquired contact lens-maker Bausch + Lomb for $8.7 billion.
    
In a statement, Valeant said the Salix acquisition will create a new, strong platform for growth, noting the company’s focus on developing drugs to treat gastrointestinal diseases.
    
“The growing (gastrointestinal) market has attractive fundamentals, and Salix has a portfolio of terrific products that are outpacing the market in terms of volume growth and a promising near-term pipeline of innovative products,” said J. Michael Pearson, Valeant’s chairman and chief executive officer.
    
Valeant expects to reap more than $500 million in annual cost savings for the combined company.
    
The company also said it has no plans to reduce Salix’s specialty sales forces or hospital, key account and field reimbursement staff. It noted that it hasn’t determined how many of Salix’s primary-care sales staff will remain.
    
Valeant will finance the all-cash takeover bid with a combination of bank debt and bonds.
    
The company expects that the transaction will contribute modestly to Valeant’s 2015 cash earnings per share. It projects a 20 percent boost in 2016, however.
    
The deal is expected to close in the second quarter.
    
Valeant, which is based in Laval, Canada, has scheduled a conference call with financial analysts early Monday to discuss the Salix acquisition.