Endo International Plc share price up, to acquire Auxilium Pharmaceuticals in a $2.6-billion deal

Endo International Plc agreed to purchase Auxilium Pharmaceuticals Inc. in a $2.6-billion cash-and-stock deal, gaining access to testosterone treatments.

Auxilium shareholders will be provided with the opportunity to choose between cash, stock or a combination of both. The takeover still needs the approval of Auxiliums investors, but the transaction is expected to be finalized within the first six months of 2015.

The Chief Executive Officer of Endo – Mr. Rajiv De Silva said in a statement: “We are pleased to have reached this agreement with Auxilium, which we believe will create value for both Endo and Auxilium shareholders, as well as for patients, customers and employees.”

According to the joint statement of the two companies, Endo will pay a price of $33.25 per share. This is around 55% higher than the companys value on September 16th, when it received its first acquisition offer by Endo for $28.10 per share. Auxilium declined that bid, saying it was significantly undervaluing the company.

The new sweetened price also represents a 12% premium to the closing price of Auxilium on Wednesday. The cash portion of the takeover bid is planned to be financed through a combination of cash on hand and committed debt financing from Citi.

Under the terms of the deal, Auxilium abandoned its plans to carry out a tax-inversion deal with Canada-based maker of ocular products QLT Inc., which would have allowed the company to redomicile to Canada. The acquisition of Auxilium is expected to help Endo save annual expenses of about $175 million. In addition, it will provide the US-based company with access to Auxiliums men healthcare products and pipeline, including its lead drug Xiaflex.

Endo transferred its tax domicile from Pennsylvania to Ireland in 2013, when the company purchased the Canada-based drug producer Paladin Labs Inc.

Endo International Plc settled 5.94% lower on Thursday on the NASDAQ to close at $66.78 per share, marking a one-year change of +51.67%. The company is valued at $10.90 billion. According to CNN Money, the 16 analysts offering 12-month price forecasts for Endo International PLC have a median target of $80.50, with a high estimate of $90.00 and a low estimate of $45.00. The median estimate represents a +20.55% increase from the last price of $66.78.