A sign sits in front of Shire's manufacturing facility in Lexington, Massachusetts
A sign sits in front of Shire's manufacturing facility in Lexington, MassachusettsReuters

British pharmaceutical company Shire Plc and its Canadian rival Valeant Pharmaceuticals are preparing to acquire US bowel drugmaker Salix Pharmaceuticals Inc, according to media reports.

Shire has taken initial steps towards a bid for the US company and is working with advisers on a potential offer, Reuters reported, citing people familiar with the matter.

Shire is evaluating various financing options for a possible Salix bid, one of the sources said. The sources cautioned that Shire may still decide against a bid given the complexity of the deal.

The report added that Valeant Pharmaceuticals has been exploring an offer for Salix.

Meanwhile, Bloomberg citing sources reported that Valeant Pharmaceuticals has arranged financing for a potential takeover of Salix. Valeant's likely to make an offer of more than $150 (£98.1, €132.2) per share, one of the sources said.

The sources added that there is no certainty a deal will be reached between the two companies, and Valeant is wary of overpaying and could decide to explore alternative acquisitions.

Salix, known for its gastrointestinal drugs, is considering its options in the midst of a management shakeup and inventory issues. It makes drugs to treat ulcerative colitis and travellers' diarrhoea and is nearing approval for a potential treatment of irritable bowel syndrome.

Salix's shares rose to a record high of $167.50 at close on 12 February, taking its market value to about $55.8bn.

Other drugmakers that could be interested in Salix's gastrointestinal drugs are Takeda Pharmaceutical, AstraZeneca Plc, AbbVie Inc and Endo International Plc, Bloomberg reported citing a New York-based analyst for Piper Jaffray Cos.