Health care mergers and acquisitions is alive and well as confirmed by Valeant Pharmaceuticals (NYSE: VRX) acquisition of Salix Pharmaceuticals (NasdaqGS: SLXP) announced over the weekend.
Canada-based Valeant, a habitual acquirer, will pay $10.1 billion, or $158 per share, for North Carolina-based Salix. That is barely above where shares of Salix closed Friday, but the deal carries an enterprise value of $14.5 billion, or about 45% above Salix’s market value at Friday’s close.
With Salix being a long rumored takeover target, the stock has a track record of moving several exchange traded funds on mergers and acquisitions rumors. That is to say Monday could bring some interesting action in ETFs that held decent Salix weights at Friday’s close. [ETFs for a Salix Takeover]
The PowerShares Dynamic Pharmaceuticals Portfolio (NYSEArca: PJP) is one of a small number of ETFs that featured Salix as a top 10 holding at Friday’s close. To be precise PJP, which is a strategic beta ETF, enters Monday with a 4.47% weight to Salix, making the stock the fund’s seventh-largest holding.
PJP tracks the Dynamic Pharmaceutical Intellidex Index which evaluates companies for inclusion based on “price momentum, earnings momentum, quality, management action, and value,” according to PowerShares. Up 13.4% year-to-date, PJP hit an all-time high last Friday on above average volume. [A Fabulous Pharma ETF]
The equal-weight SPDR Pharmaceuticals ETF (NYSEArca: XPH), which like PJP was one of 2014’s top-performing health care ETFs, features an almost 3.9% weight to Salix, making the stock that ETF’s largest holding. Up 14% year-to-date, XPH also hit an all-time high last Friday.
Confirming that the health care sector is once again asserting its dominance in 2015, five of the 10 best sector ETFs to this point in the year are health care funds. That includes XPH and PJP in second- and third-place, respectively.
Another pharmaceuticals ETF to keep an eye on is the Market Vectors Pharmaceutical ETF (NYSEArca: PPH). PPH’s combined weight to Valeant and Salix is nearly 5.1%. The ETF also touched a new high last Friday on above average volume and is up 7.1% this year.
SPDR Pharmaceuticals ETF
ETF Trends editorial team contributed to this post.