Shire and Valeant are reportedly eyeing $10B bids for Salix

Salix Pharmaceuticals ($SLXP), moving on from an embarrassing inventory scandal, is reportedly headed for a bidding war between two larger companies with diametric approaches to the business of developing drugs.

Valeant Pharmaceuticals ($VRX) and Shire ($SHPG) have each taken steps toward making a go at the North Carolina company, according reports. Citing unnamed sources, Bloomberg says Valeant has already arranged financing for an offer, which could come in at around $150 a share, a roughly 5% premium to Salix's Wednesday close. Meanwhile, Reuters reports that Shire is a few steps behind on the same trail, working with advisers and ferreting out how to line up funds for a bid.

The sudden rush of interest comes as Salix is still picking up the pieces from an accounting issue that tanked its market value and shook up its management ranks. Last year, the company divulged that it had been misreporting the inventory of its irritable bowel syndrome drug Xifaxan--thus inflating sales--and would need to reissue its 2013 and 2014 financial statements. CEO Carol Logan eventually stepped down alongside some other key executives, and the drugmaker is working to find its footing and move forward.

Now, if the reports are accurate, it could face the prospect of choosing between two acquisitive suitors with little in common. Valeant has a penchant for stringing together deals that give it on-the-market assets and slashing the budgets and payrolls of its targets, part of CEO J. Michael Pearson's guiding ethos that value is best created by buying products and not developing them. Shire, on the other hand, has spent billions on M&A with an eye toward fleshing out its pipeline, which CEO Flemming Ornskov now touts as the best it has ever been.

Shareholders, of course, will likely prefer the company offering the most money, and if Valeant and Shire both get involved, Salix's price tag could soar well beyond its $10 billion market cap.

- read the Reuters story
- here's Bloomberg's scoop

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