|Endo CEO Rajiv De Silva|
After Endo ($ENDP) lost Salix ($SLXP) earlier this year, analysts didn't think there would be much left for the drugmaker to target in terms of M&A. But now, the company is snatching up generics maker Par Pharmaceutical for $8 billion, getting its hands on the company's growing injectables portfolio.
Dublin, Ireland-based Endo will hand over 18 million shares and $6.5 billion in cash in a deal already approved by the companies' boards of directors. If all goes to plan, the acquisition would generate double-digit revenue growth for Endo and help ramp up its Qualitest generics business, an "extremely attractive and effective growth driver" for the company, CEO Rajiv De Silva said in a statement.
Endo will inherit some 100 products from Par--including its generic injectables--that together accounted for $1.3 billion in 2014 sales. As difficult-to-manufacture products, injectable meds tend to be more insulated from competition than generic pills are. They're also more profitable.
"This transaction with Par builds upon our generics growth, adding a strong portfolio of high barrier-to-entry and attractive gross margin products while also transforming Endo, creating a powerful corporate platform for future growth and strategic M&A," De Silva said. The companies expect to close the deal in the second half of 2015.
The deal marks a bright point for Endo, which needed a boost after losing Salix to Valeant ($VRX) earlier this year. At the time, De Silva said he was "disappointed," but would continue to scout out potential acquisitions. The company earlier this month snapped up a portfolio of branded and generic products from South Africa's Aspen, bolstering its presence in the company's home country. And Endo is "casting a pretty wide net" when it comes to deal shopping, Piper Jaffray analyst David Amsellem said earlier this year, by looking for smaller companies that the broader investment community may have never heard of.
Par could be exactly what the doctor ordered. The recently-bulked up generics maker, owned by private equity outfit TPG, shelled out $490 million last year for JHP Pharmaceuticals to gain a portfolio of branded and generic injectable drugs, giving it more clout in the rapidly growing injectables market--and more bulk for an IPO or cash-out sale. The company filed for a $500 million IPO in March, but apparently opted for a sale instead.
- read the release
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