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MALVERN, Pa., and MONTREAL — Endo Health Solutions plans to acquire Paladin Labs Inc., a Canada-based specialty pharmaceutical company, in a stock and cash deal valued at about $1.6 billion.
Endo said Tuesday that the acquisition expedites its strategic transformation into a leading global specialty health care company and creates a platform for future growth in North America and internationally.
Approximately 98% of the acquisition cost will be paid in shares of stock, Endo said. Under the agreement, Endo and Paladin Labs will be acquired by a newly formed Irish holding company. At $77 (Canadian) per Paladin Labs share, the transaction represents a 20% premium to Paladin’s share price of $63.91 as of Nov. 4, according to Endo.
"The acquisition of Paladin Labs accelerates Endo’s transformation from an integrated health solutions company to a top tier global specialty health care leader," stated Rajiv De Silva, president and chief executive officer Endo. "Together with our sharpened focus, lean operating model and improved execution within our core businesses, strategic acquisitions will continue to play a key role in maximizing our growth potential and cash-flow generation to drive future value for Endo shareholders."
De Silva noted that Paladin Labs has a proven track record of acquiring and in-licensing innovative new products and developing global growth platforms. "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," he explained. "The compelling financial and operational platform we are creating through this combination will leave the new Endo well-positioned to continue to offer products that make a difference in the lives of patients while generating superior growth and returns for our shareholders."
Paladin Labs is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products for the Canadian and world markets. Its key products serve growing drug markets, including ADHD, pain, urology and allergy, with a strong pipeline of new product launches over the next 12 months. In addition to its Canadian operations, Paladin Labs owns a controlling stake in Laboratorios Paladin S.A. de C.V. in Mexico and a 61.5% ownership stake in publicly traded Litha Healthcare Group Ltd. in South Africa.
"The transaction with Endo provides Paladin Labs shareholders an attractive current premium for their shares while allowing for ongoing participation in the upside potential of the combined company," stated Jonathan Ross Goodman, chairman and founder of Paladin Labs. "We are confident that our 17 years of consecutive record revenues will continue unabated under Endo’s stewardship. With a relentless focus on execution, talented and tenacious people, and a proven strategy, Paladin Labs has become one of Canada’s leading publicly traded pharmaceutical companies."
Plans call for the newly formed holding company to be led by Endo’s current management team. Paladin Labs will be a separate operating company under new entity and will continue to be led by Paladin’s existing management team, maintaining its headquarters location in Montreal. Its Canadian operations will continue under the Paladin Labs name.
Endo said the transaction is expected to close in the first half of 2014, subject to certain conditions and approvals, including regulatory approvals in the United States, Canada and South Africa, the approval of both companies’ shareholders, the approval of the Superior Court of Quebec, the registration and listing of the new holding company’s shares, and customary closing conditions. Shares of the newly formed holding company are expected to trade on Nasdaq.
