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JANA opens new position in Salix Pharmaceuticals

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JANA adds new position in Salix Pharmaceuticals

JANA Partners added a significant stake in Salix Pharmaceuticals, Ltd. (SLXP). The position accounted for 2.00% of the fund’s total fourth-quarter portfolio.

Salix Pharmaceuticals has a 1.52% exposure to the iShares Nasdaq Biotechnology ETF (IBB).

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Overview of Salix Pharmaceuticals

Salix Pharmaceuticals, headquartered in Raleigh, North Carolina, develops and markets prescription pharmaceutical products and medical devices for the prevention and treatment of gastrointestinal diseases.

A recent release noted that Salix is a gastrointestinal market leader with a portfolio of 22 products, including well known prescription brands Xifaxan, Uceris, Relistor, and Apriso, as well as a near- term pipeline of innovative new assets.

Valeant to acquire Salix

Valeant Pharmaceuticals (VRX) recently agreed to acquire Salix Pharmaceuticals for $158.00 per share in cash, or a total enterprise value of approximately $14.5 billion. A Valeant news release stated, “The combination is expected to yield greater than $500 million in annual cost savings from the cost base of the combined company. Synergies are expected to be achieved within six months of close, primarily from reductions in corporate overhead and R&D rationalization, with the cost to achieve these synergies to be approximately 65%.”

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Salix saw shares down last year on inventory and accounting issues

Newswire reports last year noted that Salix has been facing challenges due to inventory problems and management changes. An accounting revision in November also sent shares down. An inventory issue prompted Allergan to back away from the acquisition of Salix Pharmaceuticals.

A statement from Salix in January stated, “The Company’s previously issued consolidated financial statements for the full year 2013 and the first three quarters of 2014 require correction of certain errors and should no longer be relied upon.” It said the errors are related mainly to the timing for recognition of certain revenues, revenue-reducing returns and discounts, and expense items.

JANA’s 4Q14 positions

JANA Partners added new stakes in NCR Corporation (NCR), SolarCity Corporation (SCTY), Computer Sciences Corporation (CSC), and Salix Pharmaceuticals, Ltd. (SLXP). It sold stakes in Equinix, Inc. (EQIX), Cameron International Corporation (CAM), Dollar General Corporation (DG), and QEP Resources Inc. (QEP). It added to its stakes in Hertz Global Holdings, Inc. (HTZ) and Valeant Pharmaceuticals (VRX).

The next part of this series will cover JANA Partners’ exit from Equinix, Inc. (EQIX).

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