Endo Health Solutions, a health care company known for its pain medication, has reached a deal to acquire a Canadian specialty drug company, Paladin Labs, for $1.6 billion in stock and cash.
The acquisition is Endo’s largest since it bought American Medical Systems for $2.9 billion in 2011. Based in Montreal, Paladin offers treatments in the fields of ADHD, pain, urology and allergy, among others.
“The acquisition of Paladin Labs accelerates Endo’s transformation from an integrated health solutions company to a top-tier global specialty health care leader,†Rajiv De Silva, president and chief executive of Endo said in a statement.
The deal has a complicated structure intended to make it tax free. Each share of Endo and Paladin Labs will be acquired by a newly formed Irish holding company, “New Endo.†Paladin shareholders will receive of 1.6331 shares of New Endo stock and 1.16 Canadian dollars in cash for each of their shares. That currently represents a premium of about 20 percent to Paladin’s closing price on Monday.
In addition, Paladin shareholders will also receive one share of Knight Therapeutics, a new Canadian company formed to hold Impavido â€" a treatment for leishmaniasis, a disease spread by the bite of the female sandfly â€" that will split off as part of the transaction.
And Paladin shareholders will receive more cash if Endo’s volume weighted average share price during a certain time falls more than 7 percent.
Endo shareholders will get one share of New Endo for each of their shares. The Malvern, Pa.-based company says it does not expect the transaction to be taxable to U.S. shareholders. The deal is expected to close in the first half next year.
Deutsche Bank, Skadden, Arps, Slate, Meagher & Flom, Torys, KPMG and Houlihan Lokey Financial Advisors advised Endo. Deutsche Bank and RBC Capital Markets have agreed to provide committed financing to Endo as part of this transaction.
Credit Suisse, Davies Ward Phillips & Vineberg and Ernst & Young advised Paladin Labs.
