The Deal: Endo Health Acquires Paladin Labs in $1.6B Deal
Written by: The Deal
Tickers in this article: ENDP
NEW YORK (The Deal) -- Endo Health Solutions
moved Tuesday, Nov. 5, to acquire Canada's Paladin Labs for $1.6 billion in stock and cash and hinted that more deals could be on the way to offset declining revenue from its core products.
Terms of the deal call for Malvern, Pa.-based Endo to pay C$77 for each Paladin share, a premium of 20% to the target's $63.91 Monday close. Holders of Paladin will receive 1.6331 shares of Endo plus C$1.16 in cash, plus one share of a new entity called Knight Therapeutics Inc. that will retain Paladin's product for the treatment of leishmaniasis, a parisitic disease carried by sand flies.
As part of the deal, both Endo and Paladin will formally be acquired by a new holding company, called New Endo, that will be domiciled in Ireland.
Montreal-based Paladin is a marketer of more than 60 drugs that treat ADHD, pain, urology issues and allergies, with operations in Canada and controlling stakes in ventures operating in Mexico and South Africa. Endo said that the deal would give it a strong platform in Canada and help offset sales pressure on its core painkiller drugs from generic competition, hinting that more deals could be on the way.
"The acquisition of Paladin Labs accelerates Endo's transformation from an integrated health solutions company to a top tier global specialty healthcare leader," Endo CEO Rajiv De Silva said in a statement. "Together with our sharpened focus, lean operating model and improved execution within our core businesses, strategic acquisitions will continue to play a key role in maximizing our growth potential and cash flow generation to drive future value for Endo shareholders."
Post-deal Endo will continue to be led by the company's current management team, with Paladin operating as a separate unit led by its current management and based in Montreal. Endo said it expects to extract at least $75 million in after tax annual savings savings from the deal which will leave current Endo shareholders with control of about 77.5% of the combination.
Paladin Chairman and founder Jonathan Ross Goodman in a statement said the deal "provides Paladin Labs shareholders an attractive current premium for their shares while allowing for ongoing participation in the upside potential of the combined company."
A Deutsche Bank Securities Inc. team including David Levin, Jason Haas, Michael Cohen and Jon Ohrn joined with Houlihan Lokey Financial Advisors Inc., Skadden Arps Slate Meagher & Flom LLP, Torys LLP and KPMG to serve as advisers to Endo, with Deutsche Bank and RBC Capital Markets agreeing to provide committed financing as part of the transaction. Credit Suisse, Davies Ward Phillips & Vineberg LLP and Ernst & Young advised Paladin.
By Lou Whiteman
By Lou Whiteman