Cephalon shares surge above Valeant bid price

* Cephalon shares trade at $76, above $73/shr offer

* Analysts see the bid a good bet for Valeant

* Valeant shares up 17 pct
(Figures in U.S. dollars)

TORONTO, March 30 (Reuters) – Shares of drugmaker Cephalon
Inc (CEPH.O: Quote, Profile, Research) surged more than 29 percent on Wednesday, above a
$5.7 billion unsolicited buyout offer from Valeant
Pharmaceuticals International Inc (VRX.TO: Quote, Profile, Research) (VRX.N: Quote, Profile, Research), in a sign
investors expect a higher bid.

On Tuesday, Canada’s Valeant made public a $73 per share
bid to buy Cephalon and said it would take the offer directly
to the target’s shareholders. Cephalon’s shares were trading at
$76 before the market opened on Wednesday. The company said it
would respond to Valeant’s proposal next week.

Analysts said the deal would provide a major boost to
Valeant, which specializes in branded generics, dermatology and
neurology treatments. U.S.-listed shares in the company rose 17
percent premarket.

“While very early stage, we would not be surprised to see
very significant cost synergies of more than $500 million were
this transaction to occur,” J.P. Morgan Securities analyst
Chris Schott said in a note to clients.

Valeant has said if it did not win over Cephalon’s
stockholders, it would look at other ways to invest its
capital.

Jefferies analyst Corey Davis said Valeant’s move on
Cephalon was a major surprise, adding that Cephalon
shareholders were not likely to get a better deal elsewhere.

“We are hard pressed to recommend not taking the deal since
we had trouble seeing how the stock could get that high in the
near future,” he wrote in a note.

“It is difficult for us to envision any company willing to
be as aggressive as Valeant in cutting the costs and hence any
would-be white knight would need to place tremendous value on
the pipeline,” Davis wrote in a research report.
(Reporting by S. John Tilak, editing by Dave Zimmerman)

Cephalon shares surge above Valeant bid price