Endo International Plc, the maker of pain drugs like Opana and Percocet, agreed to buy Par Pharmaceutical Holdings Inc. for $8.05 billion as part of a plan to ignite sales growth and pursue more acquisitions.
In exchange for Par, the drugmaker agreed to give private-equity firm TPG Capital $1.55 billion in stock and $4.1 billion in cash and to assume $2.4 billion of Par’s debt. The takeover will create a generic-drug business that is among the top 5 in U.S. sales, the companies said in a statement Monday, and will boost Endo’s earnings in the first year.
The deal helps further Chief Executive Officer Rajiv De Silva’s ambitions to use a series of acquisitions to quickly expand Endo. It’s a business model De Silva helped hone at Valeant Pharmaceuticals International Inc., where he was a top executive before joining Endo in 2013.
In March, Endo lost a bidding contest to Valeant for Salix Pharmaceuticals Ltd. That purchase would have been Dublin-based Endo’s largest by far at more than $11 billion, including debt. Endo said it is seeking a capital structure that will allow for more acquisitions in the future.
The acquisition values Par at 10 to 11 times adjusted 2016 earnings, in line with other generic-drug transactions in the past few years, according to Bloomberg Intelligence. TPG will get become one of Endo’s top shareholders after the transaction, a “vote of confidence” for the drugmaker, Wells Fargo & Co. analyst Michael Faerm said in a note.
The company will partially fund the deal with an equity offering of as much as $2 billion, which could dilute the value of current investors’ holdings. Endo shares fell 5.4 percent to $80.77 at the close in New York, the biggest one-day decline since October.
The company will look for deals to expand its brand-name drug business, its injectable-drug unit and its international markets, De Silva said Monday on a conference call.
Par has almost 100 products, including oral and injectable drugs, and a “solid pipeline” that includes many medicines that if approved would have a period of market exclusivity, the companies said. Par CEO Paul Campanelli will join Endo and lead the generics business.
The deal is expected to be completed in the second half of the year. Among Par’s generic products are versions of the sedative Ambien and dementia treatment Aricept.
Endo estimated operational and tax savings of $175 million in the first 12 months after the purchase. No further shareholder approvals are needed for the deal to go through, Endo said.
Endo is one of a half-dozen U.S. drugmakers that have shifted their tax-base addresses to Ireland in the past two years to reduce bills. The company completed its switch to Dublin from Malvern, Pennsylvania, last year.
TPG, founded by billionaire David Bonderman and based in Fort Worth, Texas, bought Par through an affiliate for about $1.93 billion in 2012, according to data compiled by Bloomberg.
Endo has financing from Deutsche Bank AG and Barclays Plc to fund the cash part of the deal. JPMorgan Chase & Co. advised Par.
(An earlier version of this story corrected the amount of cash Endo is giving TPG in the deal.)