Valeant Stock Sinks As Company Misses On $10.0-Billion Deal
Valeant Pharmaceuticals Intl Inc (TSE:VRX) is trading at a little over $15.00. This is the lowest price for Valeant stock in a year. Many investors had expected a recovery, and some analysts, such as at Deutsche Bank AG (NYSE:DB), still issue a “hold.” But investors must learn to ignore the news if they want to keep Valeant, and their health too.
Valeant’s stock’s descent has been enough to challenge the strength of an athlete’s heart. On this day in 2015, Valeant stock was trading at $96.00; yesterday, it closed at $15.31. Many are familiar with the problems that led to the company’s downfall. But the replacement of the CEO—now Joseph Papa—and plans to divest many of the acquisitions the company made right until the fall of 2015 have not worked.
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Papa’s plans are to divest assets to build enough cash to clear the company’s remaining $30.0-billion debt. Investors were hoping one of those divestments might happen this week. They were disappointed. Valeant stock (VRX stock) remains a bit of a quagmire this year.
Negotiations by Takeda Pharmaceutical Co Ltd to acquire Valeant’s Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) division ended due to price disagreements on November 30. Valeant stock dropped 7.55% on Wednesday to $21.31 dollars, then closed 25% less on Thursday.
Valeant said in early November that it was in discussions with third parties for the sale of Salix, its subsidiary of gastroenterology. However, this proved deceitful. Indeed, the Valeant division strengthened the sales force for its main product, “Xifaxin.” This sent a signal to the market that it does not intend to part with it. (Source: “Valeant’s Discussions to Sell Salix to Takeda Have Broken Down,” The Wall Street Journal, November 30, 2016.)
Credits: Flickr.com/ibusiness lines
The sale of Salix could have raised as much as $10.0 billion. That would have reduced Valeant’s debt by a third with a single sale. What’s more, Salix is one of Valeant’s last acquisitions. The company had not had time to integrate it fully. Therefore, it was an ideal sale candidate.
