Dublin, Ireland-based Endo International has agreed to acquire Chesterbrook, Pa.-based Auxilium Pharmaceuticals. Endo will acquire all outstanding common stock for $33.25 per share in a cash and stock transaction. The boards of directors of both companies have unanimously approved the transaction, valued at $2.6 billion, which includes the repayment and assumption of debt.
The per share price represents a premium of 55% to Auxilium's closing price on Sept. 16, the day Endo made public its proposal for Auxilium. Auxilium stockholders may elect one of three options: 100% equity, which equates to 0.488 Endo shares per Auxilium share; 100% 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. The total cash consideration will not exceed 50% of the total equity value, and the equity consideration will not exceed 75% of the total equity value.
The adding of Auxilium’s pharmaceutical portfolio will give Endo a broader offering of urology and orthopedic products, natural complements to its current men's health and pain products. Endo expects to drive increased adoption and enhance the performance of Auxilium's Xiaflex and accelerate development of the product in potential new indications. Endo also intends to leverage its resources to optimize Auxilium's other products, including Testopel and Stendra. Endo believes the combined company will be well positioned to drive organic growth across its portfolio and to capitalize on additional future strategic M&A opportunities.
Endo expects the combined company to achieve annual cost synergies of approximately $175 million.
Immediately prior to the entering into the merger agreement with Endo, Auxilium terminated its proposed merger agreement with Vancouver-based QLT, in accordance with the terms of the QLT merger agreement. QLT said Auxulium determined the Endo proposal was superior to their planned merger agreement. Auxilium will pay QLT a termination fee of $28.4 million.
Jason Aryeh, QLT’s chairman of the board, said, “We are obviously disappointed that the merger with Auxilium did not complete. In light of this development, we will immediately re-engage in our assessment of all potential strategic options.”