Endo To Acquire Auxilium Pharma In $2.6 Bln Cash-Stock Deal

(RTTNews) - Ireland-based specialty healthcare company Endo International plc (ENDP, ENL.TO) Thursday said it has entered into a definitive agreement to acquire all outstanding shares of Auxilium Pharmaceuticals, Inc. (AUXL) for $33.25 per share in a cash and stock transaction, or a value of $2.6 billion, including repayment and assumption of debt. Auxilium shares rose about 11 percent in pre-market trading.

Auxilium has terminated its proposed merger agreement with Canadian eye drug maker QLT Inc. (QLTI, QLT.TO).

Endo expects the Auxilium transaction to be immediately accretive on closing and meaningfully accretive in each year thereafter. The deal, which is unanimously approved by the boards of directors of both companies, is expected to close in the first half of 2015.

Endo noted that Auxilium stockholders will be able to elect cash and stock, all-stock or all-cash consideration, subject to proration in accordance with the terms of the definitive agreement.

According to the firm, the per share consideration represents a premium of 55 percent to Auxilium's closing price on September 16, 2014, the day Endo made public its proposal for Auxilium.

Subject to aggregate cash and equity consideration limits, Auxilium stockholders may elect one of three options with respect to the transaction consideration.

The stockholders may opt 100 percent equity which equates to 0.488 Endo shares per Auxilium share, 100 percent cash which equates to $33.25 per Auxilium share or a standard election of an equal mix of $16.625 in cash and 0.244 Endo shares per Auxilium share.

Endo stated that the total cash consideration will not be more than 50 percent of the total equity value and the equity consideration will not exceed 75 percent of the total equity value.

Endo expects the combined company to achieve annual cost synergies of about $175 million. The synergy run-rate is expected to be fully realized on an annual basis in the first year after closing and includes Auxilium's reduction in annual operating expenses announced earlier.

The addition of Auxilium's leading men's health products, including Xiaflex is expected to significantly enhance Endo's branded pharmaceutical business.

In last December, U.S. FDA approved the expanded use of Auxilium's Xiaflex as the first drug to treat men with bothersome curvature of the penis - a condition known as Peyronie's disease.

Rajiv De Silva, president and chief executive officer of Endo stated, "By adding Auxilium's complementary commercial portfolio, we believe this transaction is aligned with our strategy of pursuing accretive, value creating growth opportunities."

Endo plans to fund the cash portion of the deal through a combination of existing cash on hand and committed debt financing from Citi.

It was on September 16, that Endo offered to buy Auxilium Pharma for $28.10 a share in a cash and stock transaction, valued at $2.2 billion.

Last month end, Auxilium has rejected the unsolicited proposal from Endo, noting that it is not a superior offer and "significantly undervalues" Auxilium.

Separately, QLT announced that it has been advised by Auxilium Pharma that it has determined the Endo proposal is superior under the terms of the Agreement and Plan of Merger, and has agreed to concurrently pay to QLT a termination fee of $28.4 million.

ENDP closed Wednesday's trading at $71, up 3.80 percent.

AUXL ended on Wednesday at $29.76. In the pre-market activity on Thursday, the shares are up 10.89 percent.