Endo International plans to acquire Par Pharmaceutical for $8.05 billion cash and stock, plus debt, the companies said today—an acquisition that will expand the buyer’s Qualitest® generic drugs business, catapulting it into the top five as measured by U.S. sales.

Endo will acquire Par from owner TPG, a global private investment firm with $67 billion in capital under management. TPG acquired Par for $1.9 billion in 2012, taking the drug company private.

The deal has been unanimously approved by the boards of Endo and Par, and supported by the management teams of both companies. No further shareholder approvals are required.

“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,” said Rajiv De Silva, president and CEO of Endo. “We believe the acquisition of Par underscores the continued execution of Endo's value-driven M&A strategy and helps deliver on our goal of achieving double-digit revenue growth for the overall business over the long-term.”

Par’s portfolio includes nearly 100 products in multiple dosage forms and delivery systems, including oral solids, oral suspensions, injectables, and high barrier-to-entry products.

Because the portfolio is “highly profitable” with increasing adjusted gross margins, Endo expects the deal will help drive double-digit growth for its overall business, expanding its corporate scope, size, and future M&A potential.

Par’s pipeline includes more than 200 ANDAs, of which more than half (115) have been filed with the FDA as of December 31, 2014. About 33% of the filed ANDAs are potential first-to-file or first-to-market opportunities and 75% 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.

The Par R&D pipeline is expected to generate approximately 20 to 25 ANDA filings each year in 2015, 2016 and 2017, the companies said.

However, Endo also expects the transaction will generate $175 million of potential cost-cutting through operational and tax “synergies” expected to be realized within the first 12 months following the completion of the transaction.

The companies have promised to preserve investment in the R&D pipeline “to help drive long-term organic growth.” Endo spent $154.203 million on R&D last year, while Par shelled out $119.095 million, according to Form 10-Ks both companies filed earlier this year with the U.S. Securities and Exchange Commission.

As part of the deal, Par CEO Paul V. Campanelli will join Endo’s leadership team, following more than 25 years in the generics industry, the last 15 of those at Par.

“Par Pharmaceutical is committed to significantly expanding our scope, capacity and capabilities to realize the maximum value of our rich and diversified product portfolio and R&D pipeline. We believe our combination with Endo best positions us to do so,” Campanelli said in a statement. “We share Endo's goal of developing and commercializing generic drugs in areas of greatest revenue potential, complex formulations and longer life cycles.”

Endo said its planned acquisition of Par is expected to help drive long-term double-digit revenue growth. Endo has projected that the deal will add to its non-GAAP diluted earnings per share within the first 12 months, with double-digit accretion to non-GAAP diluted earnings per share expected in 2016.

To acquire Par, Endo will offer approximately 18 million of its shares valued at $1.55 billion, based on the 10-day volume weighted average share price of Endo ending on May 15, plus $6.5 billion cash to Par shareholders.

Endo said it has secured fully committed financing from Deutsche Bank and Barclays to fund the cash portion, and expects to implement a permanent capital structure to finance the transaction before the close. The deal is set to close in the second half of this year, subject to regulatory approval in the U.S. and some other jurisdictions, as well as other customary closing conditions.

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