UPDATE 2-Valeant rejected joint takeover bid from Takeda, TPG in spring - source

(Changes sourcing, adds analyst comment)
By Michael Flaherty
May 26 (Reuters) - Valeant Pharmaceuticals International Inc (NYSE:VRX)
VRX.TO received a joint takeover offer from Japan's Takeda
Pharmaceutical Co Ltd 4502.T and TPG Capital Management LP
TPG.UL this spring that the Canadian drugmaker rejected,
according to a source familiar with the matter.
The offer was made a few weeks before Joseph Papa took over
as Valeant's new chief executive in April last week, the source
told Reuters.
The board wants to give Papa time to focus on running the
company before thinking about a sale offer, the source said.
Takeda and private equity firm TPG were ready to offer a
substantial premium to Valeant, whose stock had fallen about 65
percent this year up to the close of trade on April 22 as the
drugmaker was not just seeking a new head but was also hit by an
accounting scandal, the source added.
However, analysts from Mizuho Securities USA said that large
shareholders and board members are so far 'underwater' on their
positions and would not want to part with the stock even at a
premium to current levels.
"It would require a hostile offer and protracted battle to
dislodge the current board, which most activists may find
unattractive," Irina Koffler, an analyst from Mizuho, said in a
note late Thursday.
The brokerage, which reiterated its 'underperform' rating on
Valeant, also said the company's assets do not warrant a premium
bid at this time.
TPG and Valeant declined to comment. Takeda did not
immediately respond to a request for comment.
There are currently no talks between the three companies
following the bid's rejection, according to the Wall Street
Journal, which first reported the news late Thursday and also
added that as part of the approach Takeda would take the
business of Salix Pharmaceuticals and TPG would take much of the
rest. (http://on.wsj.com/1TZplmC)
Valeant's shares were up 6 percent at $28.55 on the New York
Stock Exchange in extended trading on Thursday.