Concordia Healthcare Corp. T.CXR.R

Could CXR afford a tuck-in from a VRX breakup?

[CCK]

Seeing the share price today continuing its recovery makes me feel good about having added to my CXR position at just under C$35. Hearing some chatter about scenarios of what lies ahead for VRX. Some say having added Ackman to the Board that he may be a proponent of breaking the company up in order to unlock value. That would be an interesting headline and would possibly allow CXR to take a swing at any VRX asset sale. What would concern me is that any possible tuck-in acquisition from VRX would probably be a large acquisition for CXR. CXR is already significantly leveraged as we know and I don't know if the street would have any appetite for additional debt for CRX... no matter how tempting the prize may be. Thoughts?

[sunshine7]

CXR understands the debt concern. Any product acquisitions will be done from cash flow AFTER debt payments are looked after. All indication are that this can be $200M+ in 2016, so a small acquisition is possible but needs to be immediately accretive.

[dannyd9]

Management has already stated that debt reduction is first priority, so unlikely any purchases of other assets until debt to equity ration is at reasonable levels. Mkt would sell CXR in the event of another acquistion, however timely. Also, CXR has several new products from its own pipeline that will require upfront capital to launch. My guess would be CXR needs to get to about 50 dollars and then

[adamchess]

200M is a drop in the bucket to CXR at this point. They are increasing sales in Donnatal, etc by more than that. 2016 sales over $1B. Adding products and increasing sales further is not a bad idea if the cost is reasonable. They have the better pipeline now maybe to attract products from other companies to join at the right deal.

[cg16]

and the right "tuck in" could delever as well. double winning.