In a specialty pharmaceutical deal, Endo International PLC has agreed to acquire all of the outstanding shares of common stock of Auxilium Pharmaceuticals Inc. for a per-share consideration of $33.25 in a cash-and-stock transaction. The boards of directors of both companies have unanimously approved the transaction, which is valued at $2.6 billion, including the repayment and assumption of debt. The transaction will include an election mechanism for Auxilium stockholders to elect cash and stock, all-stock, or all-cash consideration, subject to proration in accordance with the terms of the definitive agreement. Immediately prior to the entering into the merger agreement with Endo, Auxilium terminated its proposed merger agreement with QLT, Inc., in accordance with the terms of the QLT merger agreement.

Subject to aggregate cash and equity consideration limits, Auxilium stockholders may elect one of three options with respect to transaction consideration: 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.

Upon completion of the transaction, Endo’s pharmaceutical portfolio will have a broader offering of urology and orthopedic products that complements its current men’s health and pain products. Endo expects the combined company to achieve annual cost synergies of approximately $175 million. This synergy run-rate is expected to be fully realized on an annual basis in the first year after closing and includes Auxilium’s reduction in annual operating expenses previously announced on September 9, 2014. Endo intends to fund the cash portion of the transaction through a combination of existing cash on hand and committed debt financing from Citi. The transaction is expected to close in the first half of 2015 and is subject to the approval of Auxilium’s stockholders, regulatory approval in the US and certain other jurisdictions, and other customary closing conditions.

Source: Endo International