Endo International plc (NASDAQ:ENDP) announced late Tuesday that it was making a $2.2 billion cash and stock offer for Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL). Endo says it will pay $28.10 a share for Auxilium.
Auxilium’s shares soared up well past the 31% premium that Endo is offering in the aftermarket Tuesday. The stock closed at $21.52, with shares rising just above the $30 mark in late trading Tuesday, and are up over 40% this morning.
In making this surprise move, Endo International plc (NASDAQ:ENDP) obviously thinks it can wring more savings in expenses out of the combined operation than the $75 million in cutbacks already planned by Auxilium.
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Endo has been a very active M&A player over the last year. Back in the spring, Endo bought Canada’s Paladin Labs for $1.6 billion, setting up a tax inversion deal to low-corporate-tax-rate Ireland. Then the firm pulled the trigger on a $600 million acquisition of Dava Pharmaceutical. The company has also reportedly been seeking a buyer for device manufacturer American Medical Systems.
Statement from Endo
Endo International plc (NASDAQ:ENDP) released a statement explaining their rationale for making the offer to Auxilium, stating: “Endo’s proposal would provide Auxilium shareholders a substantial premium and immediate cash value for their investment in Auxilium, as well as the opportunity to participate in the upside potential of a leading global specialty healthcare company,” said Rajiv De Silva, president and chief executive officer of Endo, in a statement. “In light of the highly complementary nature of our two companies’ commercial portfolios, the growth potential of Auxilium’s Xiaflex and the significant synergy opportunities, we believe this compelling strategic combination would result in and create benefits for both Endo and Auxilium shareholders, as well as for patients, customers and employees.”
Auxilium has nearly completed tax inversion deal with QLT
Of note, Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL) has already nearly completed a merger with QLT. The deal was designed to reduce the firm’s tax rate from 35% to Canada’s 15%. Earlier this summer, the company said it would acquire QLT in a $345 million stock deal and headquarter the “new” firm in British Columbia. When Auxilium Pharmaceuticals CEO Adrian Adams was discussing the QLT deal this summer, he mentioned using the freed-up tax money for more R&D as well as acquisitions.