Sources told Bloomberg that Salix Pharmaceuticals Ltd has given a proposal for the rate for the loan it is getting to acquire Santarus Inc. Salix is a developer and marketer of prescription pharmaceutical products to treat gastrointestinal ailments. Based on information from its website, Santarus describes itself as a specialty biopharmaceutical firm that concentrates on acquiring, developing and commercializing proprietary products to help patients that are under the treatment of physician specialists.

For the USD 1.2 billion financing, one person said the drug manufacturer has proposed to pay anywhere from 3.5 percentage points to 3.75 percentage points more than the London Interbank Offered Rate or Libor. One source said Libor carries a 1% minimum. They spoke on the condition of anonymity because the terms of the deal have not yet been finalized.  

According to Investopedia, Libor is an interest at which banks can borrow funds from other lenders in the London interbank market. It is the most widely used benchmark for short-term interest rates worldwide. The British Bankers Association fixes the Libor daily.

Based in Raleigh, North Carolina, Salix said it would be purchasing Santarus Inc for a price tag of USD 2.6 billion. The acquisition, announced by both companies last November 7, would enable Salix to get therapies for diabetes and heartburn.

Salix said it would be financing the purchase of the San Diego-based firm using committed financing amounting to USD 1.95 billion from Jefferies Group and its cash on hand worth USD 800 million.

One person with knowledge of the matter told Reuters that the USD 1.2 billion term loan that is being marketed to investors could be sold at 99.5 cents on the dollar. The lenders are given until December 13 to inform Jefferies if they intend to make an investment on the loan. Last month, Jefferies said it would also give Salix a revolving credit loan worth USD 150 million.