Jefferies Sees Acquisition Of Salix Pharmaceuticals As Being Even More Likely Now

In a note published Friday, Jefferies analyst David Steinberg published a note on Salix Pharmaceuticals (NASDAQ: SLXP) that commented on the likelihood of Allergan's (NYSE: AGN) acquisition of the company.

In the report, Jefferies noted, "In hindsight, it makes perfect sense. The “overstuffed” channels were likely the result of Allergan's due diligence on a possible merger – which probably recently concluded. We have always thought Salix was an attractive bolt-on acquisition given its dominance in GI diseases. And Thursday's events do not change our view. In fact, with a share price “reset” Salix can now likely be bought for a far lower valuation. Moreover, we would not think there would be as much “pushback” on price given management's miscues – based on the view that an acquirer such as Actavis or Shire would be better stewards of the assets vs the current management team."

Jefferies maintained its Buy rating and lowered the price target on Salix Pharmaceuticals from $177.00 to $133.00.