Endo International Plc agreed to buy Par Pharmaceutical Holdings Inc. from investment firm TPG Capital in a deal valued at $8.05 billion, two months after dropping an effort to purchase Salix Pharmaceuticals Ltd.
The U.S.-Irish drugmaker plans to acquire Par with 18 million Endo shares, valued at $1.55 billion, and $6.5 billion in cash, and will assume Par’s debt, the companies said in a statement Monday. The takeover will create a generic drugs business that is among the top 5 in U.S. sales, the companies said, and will boost Endo’s earnings in the first year.
The purchase “builds upon our generics growth, adding a strong portfolio of high barrier-to-entry and attractive gross margin products,” Endo Chief Executive Officer Rajiv De Silva said in the statement.
Endo said it is seeking a capital structure that will allow for more acquisitions in the future. It withdrew a cash-and- stock offer for Salix in March after Valeant Pharmaceuticals International Inc. countered with a sweetened all-cash bid. That acquisition would have been Dublin-based Endo’s largest by far at more than $11 billion, including debt.
Endo shares rose 4.3 percent in pre-market trading in New York as of 7:39 a.m. The stock had risen 18 percent this year before today.
Par has almost 100 products, including oral and injectable drugs, and a “solid pipeline” that includes many medicines that if approved would have a period of market exclusivity, the companies said. Par CEO Paul Campanelli will join Endo and lead the generics business.
The deal “positions Endo for long-term double-digit organic growth, strong cash flow and financial flexibility,” according to the statement. The purchase is expected to be completed in the second half of the year.
Endo estimated operational and tax savings of $175 million in the first 12 months after the purchase. No further shareholder approvals are needed for the deal to go through, Endo said.
Endo is one of a half-dozen U.S. drugmakers that have shifted their tax-base addresses to Ireland in the past two years to reduce bills. The company completed its switch to Dublin from Malvern, Pennsylvania, last year.
TPG, founded by billionaire David Bonderman and based in Fort Worth, Texas, bought Par through an affiliate for about $1.93 billion in 2012, according to data compiled by Bloomberg.
Endo has financing from Deutsche Bank AG and Barclays Plc to fund the cash part of the deal. JPMorgan Chase & Co. advised Par.