Endo Intl to buy Auxilium in cash-stock deal valued at $2.6 billion

Ireland’s Endo International is planning to buy Auxilium Pharmaceuticals in a sweetened cash-and-stock deal valued at $2.6 billion a few weeks after Auxilium rejected a lower bid. The Auxilium board embraced the latest offer but its shareholders get to vote on it.

Endo said Thursday that it will pay $33.25 in cash and stock for each Auxilium share. That represents a 55 per cent premium to Auxilium’s closing price on Sept. 16, the day Endo went public with its acquisition attempt.

Endo International PLC initially offered $28.10 per share in a bid valued at $2.2 billion, which like the revised offer includes the assumption of debt. But Auxilium Pharmaceuticals Inc. said on Sept. 22 that the bid undervalued its business, and it recommended that shareholders vote for a separate, all-stock combination with Canadian eye drugmaker QLT Inc.

Auxilium, which is based in Chesterbrook, Pennsylvania, also said a day after Endo announced its initial bid that its board had adopted a “poison pill” shareholder rights plan to discourage unsolicited takeovers.

Last Friday, Auxilium said that it ended its proposed deal with QLT. The boards of both Endo and Auxilium have unanimously approved the higher bid. If Auxilium shareholders approve the deal, the companies expect the deal to close in the first half of next year.

Auxilium shareholders will be able to choose an all-cash, all-stock or cash-and-stock payment in the revised bid.

Auxilium is struggling with reduced sales of its testosterone gel Testim and said last month that it would cut about 190 jobs, or 30 per cent of its workforce, as part of a plan to save $75 million per year.

The company also makes Xiaflex, a drug approved to treat two rare conditions: Dupuytren’s contracture, which makes the tendons of the hand thicken and shorten, and Peyronie’s disease, which causes abnormal curvature of the penis.

Endo has transformed itself from a drug company to a larger drug and medical device maker over the course of several years and a spate of acquisitions. It moved its headquarters to Dublin, Ireland, from the United States as part of a $1.5 billion purchase of Paladin Labs the company announced last year. It also changed its name to Endo International PLC from Endo Health Solutions.

Shares of Auxilium jumped nearly 11 per cent, or $3.18, to $32.94 in premarket trading Thursday about an hour before markets opened. That put the stock up 59 per cent so far this year. Meanwhile, U.S.-traded shares of Endo fell $1.34, or 1.9 per cent, to $69.66 in premarket trading.