Endo Health Solutions has reached a definitive agreement to acquire Paladin Labs, a Canada-based specialty pharmaceutical company, in a stock and cash transaction valued at approximately $1.6 billion, of which approximately 98% will be paid in stock. The acquisition accelerates Endo's strategic transformation to a global specialty healthcare company and creates a platform for future growth in North America and internationally. Each share of Endo and Paladin Labs will be acquired by a newly-formed Irish holding company (New Endo). At $77 per Paladin Labs share, the transaction represents a 20% premium to Paladin Labs' share price on Nov. 4.
"The transaction with Endo provides Paladin Labs shareholders an attractive current premium for their shares while allowing for ongoing participation in the upside potential of the combined company," said Jonathan Ross Goodman, chairman and founder of Paladin Labs. "We are confident our 17 years of consecutive record revenues will continue unabated under Endo's stewardship.”
New Endo will be led by Endo's current management team. Paladin Labs will be a separate operating company under New Endo and will continue to be led by Paladin Labs' current management team, maintaining its current headquarters in Montreal. Its Canadian operations will continue under the Paladin Labs name. Operational and tax synergies as a result of the transaction are expected to total at least $75 million after tax savings on an annual basis. The savings are not expected to materially impact Paladin Labs' Canadian operations, and it is Endo's intention to continue to expand Paladin Labs' presence in the Canadian market.
The transaction is expected to close in the first half of 2014, subject to certain conditions and approvals. Shareholders representing approximately 34% of Paladin Labs outstanding shares have agreed to vote in favor of the transaction. These shareholders have the right to terminate this voting agreement if Endo's volume-weighted average share price declines more than 24% during an agreed reference period.