Endo Health Solutions said today it is acquiring Canadian-based specialty pharma company Paladin Labs for roughly $1.6 billion, in a stock and cash deal that expands the buyer’s global presence, especially in emerging markets and Canada.
Headquartered in Montreal, Paladin focuses on acquiring or in-licensing innovative pharmaceutical products for the Canadian and world markets, with over 60 marketed drugs among its offerings. Paladin’s key products are drugs for indications such as ADHD, pain, urology, and allergy, with several new product launches planned over the next 12 months.
During the second quarter, Paladin submitted an NDA to the FDA for Impavido® (miltefosine) for leishmaniasis, and won the agency’s priority-review designation. Paladin also launched two drugs, Silenor® (doxepin hydrochloride) for insomnia and Amniosense™, Canada’s first over-the-counter amniotic fluid leak detection test, for which it received priority review status. Paladin has grown its portfolio by acquiring from Bayer Pharma the bacterial infections drug Binotal® for Latin America including Mexico, Brazil, Columbia, Ecuador, and some Central American nations.
In addition to its Canadian operations, Paladin Labs owns a controlling stake in Laboratorios Paladinin Mexico and a 61.5% ownership stake in South Africa’s publicly traded Litha Healthcare Group.
“The acquisition of Paladin Labs accelerates Endo’s transformation from an integrated health solutions company to a top-tier global specialty healthcare leader,” Endo CEO Rajiv De Silva said in a statement. “Paladin Labs’ stable and growing cash flows and strong Canadian franchise complement our existing portfolio and further diversify our pharmaceutical product mix and geographic reach.”
Under the deal, approved unanimously by the boards of both companies, Paladin Labs shareholders will receive 1.6331 shares in a new Irish-based holding company formed to own the combined company, plus C$1.16 ($1.11) cash, subject to adjustment, for each Paladin Labs share they own upon closing of the acquisition. At closing, current Endo shareholders would own about 77.5% of the new Endo, with the rest owned by current Paladin Labs shareholders. Each Paladin share is valued in the deal at $77, based on the five-day volume-weighted average share price for Endo, and the five-day average currency exchange rate calculated at close of market this past Friday.
Also for each share owned at closing, Paladin Labs shareholders will receive one share of Knight Therapeutics, a new Canadian company to be spun out of the combined Endo-Paladin. Knight’s assets will include Impavido®, which Endo expects will immediately add to the company’s adjusted earnings per share next year.
The deal is expected to close in the first half of 2014 subject to customary conditions as well as regulatory approvals in the United States, Canada, and South Africa; approval of the Superior Court of Quebec; registration and listing of shares in the newly combined company; and approval by both companies’ shareholders. Shareholders representing 34% of Paladin’s outstanding shares have agreed to the acquisition.
At C$77 (about $73.70) per share, Endo is paying a premium of more than 20% above Paladin Labs’ $63.91 share price yesterday at the close of trading on NASDAQ.