Endo International Plc said it would buy Par Pharmaceutical Holdings Inc from private-equity firm TPG Capital for about $8 billion, including debt, to become a top-five global generic drugmaker. The deal will add about 100 approved generic drugs and about four manufacturing facilities, Endo said on Monday.
Generics accounted for about 40 percent of Endo's 2014 revenue of $2.88 billion, up from 30 percent in 2013. Par had net product sales of $1.28 billion in 2014.
"(The deal) roughly doubles (Endo's) generics revenues, diversifies its presence in higher-value generics, potentially boosts growth and margins," Wells Fargo analyst Michael Faerm wrote in a note.
Most drugs used in the United States are cheaper generic copies of brand-name medications. The percentage is expected to grow as leading drugs lose patent protection.
World-wide generics market, estimated to be worth $74 billion in 2014, is expected to grow by an average 6.3 percent annually over the next six years, according to market research firm EvaluatePharma.
Generic drugmakers are also looking to gain scale and get access to products with higher profit margins.
The world's biggest generic drug maker, Teva Pharmaceutical Industries Ltd, has made an unsolicited $43-billion bid for rival Mylan NV, as its lucrative Copaxone drug faces generic competition.
Mylan is itself trying to buy Perrigo Co Plc, which has rebuffed the offer.
Endo, which has completed six deals since 2013, made a bold $11-billion bid for Salix Pharmaceuticals Ltd in March, but lost out to Valeant Pharmaceuticals International Inc.
Endo is offering 18 million shares and $6.50 billion in cash for Par.
Par was acquired by TPG Capital for $1.9 billion in 2012 following pressure from activist firm Relational Investors to sell itself.
The company, which filed with US regulators in March for an initial public offering, had debt of $2.35 billion as of March 31.
Par CEO Paul Campanelli will lead Endo's generics business.
Endo, which had a market value of $15 billion as of Friday, said it had secured financing from Deutsche Bank and Barclays.
Barclays, Deutsche Bank and Houlihan Lokey are Endo's financial advisers while J. P Morgan is financial adviser to Par.
Skadden, Arps, Slate, Meagher & Flom LLP is Endo's legal adviser and Ropes & Gray LLP is Par's legal adviser.
Dublin-based Endo's shares were marginally down at $85 in premarket trading.
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