Endo Locks Down $2.6B Deal To Acquire Auxilium
After weeks of negotiations, Endo has acquired Auxilium in a deal worth $2.6 billion, a move that adds Xiaflex, Testim, and Testopel to the company’s urology and men’s health portfolios.
Adam Dion, an analyst from GlobalData, reports that Endo’s final offer is a little high but is an accurate assessment of the company’s worth.
According to Dion, “GlobalData’s Net Present Value (NPV) analysis values Auxilium pharmaceutical assets at approximately $2.5 billion, which is in-line with Endo’s outlay. Largely driving the company’s valuation is Xiaflex with an NPV of $920 million, followed by Testopel at $570 million, and Stendra at $558 million.”
According to Endo CEO, Rajiv De Silva, this acquisition is attractive to Endo for many reasons. First, the two companies share complementary portfolios: Auxilium’s line of FDA-approved products in urology and Endo’s line of men’s health and pain drugs. The geographic locations of the two companies are likewise complementary and strategic.
Of principal interest is Auxilium’s Xiaflex, which is currently approved to treat Peyronie’s disease, Dupuytren’s contracture, frozen shoulder syndrome, though there are potentially more indications on the horizon.
Dion adds, “Testopel and Testim generated a combined sales of $271 million in 2013 and will supplement Endo’s hypogonadism therapy Fortesta.”
This deal is the result of an unsolicited $2.2 billion proposal Endo made to Auxilium last month, a move Auxilium initially attempted to outmaneuver by cutting costs and adopting business strategies in attempts to make the company’s stock unattractive to hostile take-overs.
Furthermore, Auxilium proceeded with its own acquisition of QLT, a Canadian biotech which Endo did not include in the initial offer. At the time of the initial offer, QLT reported that its $345 million merger with Auxilium was going to proceed as planned despite the proposal.
If it had, Auxilium planned to move its center of operations to British Columbia, a move which would have provided the struggling company with a reduced tax rate. Dion remarked that recent tax laws likely put an end to this strategy.
Now that the deal with Endo has been struck, the QLT acquisition has been abandoned completely.
Auxilium is the latest of many acquisitions that Endo has completed over the past year. Endo acquired DAVA, Somar, and Paladin Labs. The acquisition of Paladin Labs in February effectively moved Endo’s operations to Ireland.