Chris Lau
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Chris Lau in Value Stocks,

Leaked: Valeant to Sell Salix to Takeda for $9.3B

Breaking: Unconfirmed leak that Valeant will sell Salix

Here is the  source.

Price: $9.3 billion, down from $10.8 billion.

In light of Google, Facebook, and other cracking down on fake news site, take this information for what it is worth. Valeant selling the slow-growing unit to cut its debt is of strategic importance. 

Valeant paid $11 billion for the company. The deal closed on April 2015. Since then, debt rose but revenue did not.

Expectations: if this rumor is true, expect a formal announcement by Monday. This is welcoming news. Valeant has higher priorities, which is primarily growing the B+L unit.

Takeaway

Valeant is getting a lower sale price from Takeda, but gets cash upfront. This will clear VRX's bank debt immediately and applied to the covenants. This will cut interest debt costs and SG&A on Salix. Estimate a negative FCF of negative $200M quarterly. The upcoming sales of Brodalumab/Vesneo will add to FCF.  

Previously: