To Acquire Par Pharmaceutical (private) for $8.05B in cash and stock
Endo has entered into a definitive agreement under which Endo will acquire privately-held Par from TPG in a transaction valued at $8.05 billion, including assumption of Par debt. The combination will create a leading specialty pharmaceutical company with a generics business that is one of the industry's fastest growing and among the top five as measured by U.S. sales. It is also expected to help drive long-term double-digit revenue growth for Endo. The transaction has been unanimously approved by the Boards of Directors of Endo and Par, and is supported by the management teams of both companies. There are no further shareholder approvals required. The purchase price will consist of approximately 18 million shares ($1.55 billion of value based on the 10-day volume weighted average share price of Endo ending on May 15, 2015) of Endo equity and $6.50 billion cash consideration to Par shareholders. Endo has secured fully committed financing from Deutsche Bank and Barclays to fund the cash consideration. Endo expects to implement a permanent capital structure to finance the transaction prior to the close that would include a combination of cash, debt and an equity offering. Par Pharmaceutical is a privately-held company that was acquired through a take-private transaction by an affiliate of TPG in 2012.
The transaction is expected to be accretive to adjusted diluted earnings per share (EPS) within the first 12 months after transaction close and result in double-digit accretion to adjusted diluted EPS in full year 2016. For 2016, Endo anticipates that EBITDA generated by Par will translate into a transaction multiple of approximately 10 to 11 times pro forma adjusted EBITDA on a post-synergized basis. The transaction is expected to close in the second half of 2015 and is subject to regulatory approval in the U.S. and certain other jurisdictions, as well as other customary closing conditions.
With the addition of Par's product portfolio and R&D pipeline, Endo's already rapidly growing generics business unit is expected to become one of the largest and fastest growing in the industry, with double-digit revenue growth over the long-term and a broad product pipeline. The Par portfolio includes nearly 100 products in multiple dosage forms and delivery systems, including oral solids, oral suspensions, injectables and high barrier-to-entry products. This portfolio is highly profitable with increasing adjusted gross margins. The transaction is also expected to help drive double-digit growth for Endo's overall business, expanding the company's corporate scope, size and future M&A potential.
Par offers a solid pipeline consisting of more than 200 Abbreviated New Drug Applications (ANDAs), 115 of which were filed with the FDA as of December 31, 2014. Approximately 33 percent of the filed ANDAs are potential first-to-file or first-to-market opportunities and 75 percent of the overall development portfolio consists of Paragraph IV and first-to-file programs all of which could provide a period of market exclusivity if approved. It is expected that the Par R&D pipeline could generate approximately 20 to 25 ANDA filings each year in 2015, 2016 and 2017.