MALVERN, Pa. and MONTREAL, Nov. 5,
2013 /PRNewswire/ --
- Accelerates Endo's transformation to leading global
specialty healthcare company and creates platform for future
growth
- Paladin Labs' proven Canadian franchise, robust near-term
pipeline and emerging market business complement Endo's U.S.
strengths
- Combined company expects to grow presence in North America and internationally
- Stock and cash transaction values Paladin Labs at
$77.00 (CAD) per share
- Expected to be immediately accretive to Endo's 2014
adjusted EPS
Endo Health Solutions (NASDAQ: ENDP) ("Endo") today announced
that it has reached a definitive agreement to acquire Paladin Labs
Inc. (TSX: PLB), ("Paladin Labs") a leading Canada-based specialty pharmaceutical company,
in a stock and cash transaction valued at approximately
$1.6 billion of which approximately
98% will be paid in shares of stock as described below. The
acquisition accelerates Endo's strategic transformation to a
leading global specialty healthcare company and creates a platform
for future growth in North America
and internationally. Pursuant to the acquisition, each of
Endo and Paladin Labs will be acquired by a newly-formed Irish
holding company ("New Endo"). At $77.00 (CAD) per Paladin Labs share, the
transaction represents a 20% premium to Paladin Labs' share price
of $63.91 as of November 4, 2013, and is expected to be
immediately accretive to Endo's 2014 adjusted earnings per
share.
"The acquisition of Paladin Labs accelerates Endo's
transformation from an integrated health solutions company to a top
tier global specialty healthcare leader," said Rajiv De Silva, president and CEO of 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. Paladin Labs has a proven track record of
acquiring and in-licensing innovative new products, and developing
international 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. 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."
"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," said 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."
Paladin Labs is a specialty pharmaceutical company focused on
acquiring or in-licensing innovative pharmaceutical products for
the Canadian and world markets. With over 60 marketed drugs,
proven sales and marketing capabilities, and strong partnerships
with leading global pharmaceutical companies, Paladin Labs has a
track record of enhancing the performance of existing and newly
acquired products. 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 Limited in South Africa.
Following completion of the transaction, New Endo will be led by
Endo's current management team. Paladin Labs will be a
separate operating company under New Endo and will continue to be
led by Paladin Labs' current management team and will maintain its
current headquarters location in Montreal. Its Canadian operations will
continue under the Paladin Labs name. Operational and tax
synergies as a result of the transaction are expected to total at
least $75 million of after tax
savings on an annual basis. The savings are not expected to
materially impact Paladin Labs' Canadian operations, and it is
Endo's intention to continue to expand Paladin Labs' presence in
the Canadian market.
Transaction Details
Under the terms of the transaction, which has been unanimously
approved by the boards of both companies, Paladin Labs shareholders
will receive 1.6331 shares of New Endo stock and $1.16 (CAD) in cash, subject to adjustment, for
each Paladin Labs share they own upon closing, pursuant to a plan
of arrangement under Canadian law. The transaction values
each Paladin Labs share at $77.00
(CAD), based on the 5-day volume weighted average share price for
Endo and the 5 day average currency exchange rate calculated at
close of market on Friday, November 1. Current Endo
shareholders will receive one share of New Endo for each share of
Endo they own at closing. Upon closing, current Endo
shareholders will own approximately 77.5% of the New Endo, and
current Paladin Labs shareholders will own approximately 22.5% of
the New Endo.
In addition, pursuant to the plan of arrangement, for each
Paladin Labs share owned at closing, shareholders of Paladin Labs
will also receive one share of Knight Therapeutics Inc., ("Knight
Therapeutics") a newly formed Canadian company that will be
separated as part of the transaction. Knight Therapeutics
will hold Impavido®, Paladin Labs' product for the
treatment of leishmaniasis.
The cash consideration to be received by Paladin Labs
shareholders will be increased if Endo's volume weighted average
share price during an agreed reference period declines more than
7%. Cash compensation will be provided by Endo to Paladin
shareholders if the share price declines more than 7% but less than
20%. If Endo's share price declines between 20% and 24%
during the agreed reference period, Endo will provide partial cash
compensation to Paladin shareholders. Any decline in Endo's
share price beyond 24% will not be subject to further cash
compensation to Paladin Labs shareholders. The maximum amount
by which the aggregate cash consideration to be received by Paladin
shareholders would be increased by this price protection mechanism
is approximately $233 million.
The company does not expect the transaction, as structured, to
be taxable to U.S. shareholders of Endo. However, the
ultimate tax treatment of the transaction is not certain, could be
affected by actions taken by the company and other events, and
cannot be determined until the end of the year in which the
transaction is completed which Endo expects will be 2014.
Endo remains committed to a disciplined capital allocation
process which is focused on growth of the base business,
acquisitions and debt pay-down. The Company is continuing to
evaluate strategic alternatives for its HealthTronics business and
its branded pharmaceutical early stage discovery platform. Endo
will continue to review all of its businesses within the context of
the company's strategic direction and capital allocation
framework.
While the Paladin acquisition is primarily equity based, Endo
will adjust certain parts of its capital structure to complete the
transaction. Endo has secured committed financing that will
be used to refinance certain elements of the company's existing
indebtedness and the early repurchase of its convertible notes due
April 2015. The repurchase of the convertible notes would be
subject to market conditions. The changes to the capital
structure related to the transaction are not expected to have a
material impact on the overall leverage profile of Endo.
Approvals
The transaction is expected to close in the first half of 2014,
subject to certain conditions and approvals, including regulatory
approvals in the U.S., Canada and
South Africa, the approval of both
companies' shareholders, the approval of the Superior Court of
Quebec, the registration and
listing of New Endo shares and customary closing conditions.
Shareholders representing approximately 34 percent of Paladin Labs
outstanding shares have agreed to vote in favor of the
transaction. These shareholders have the right to terminate
this voting agreement if Endo's volume weighted average share price
declines more than 24 percent during an agreed reference
period. Shares of New Endo are expected to trade on
NASDAQ.
Deutsche Bank Securities Inc., Skadden Arps, Torys LLP and
KPMG acted as advisors to Endo. Deutsche Bank and RBC Capital
Markets have agreed to provide committed financing to Endo as part
of this transaction. Houlihan Lokey Financial Advisors,
Inc. also acted as an advisor to Endo. Credit Suisse,
Davies Ward Phillips & Vineberg LLP, and EY acted as Advisors
to Paladin Labs.
Conference Call
Endo will conduct a conference call with financial analysts to
discuss this news release today at 8:00 a.m.
ET. Investors and other interested parties may call
866-515-2911 (domestic) or +1 617-399-5125 (international) and
enter passcode 70911744. Please dial in 10 minutes prior to the
scheduled start time.
A replay of the call will be available from November 5, 2013 at 10:30
a.m. ET until 11:59 p.m. ET on November 19, 2013 by dialing 888-286-8010
(domestic) or +1 617-801-6888 (international) and entering passcode
53605349.
A simultaneous webcast of the call can be accessed by visiting
www.endo.com. In addition, a replay of the webcast will be
available until 11:59 p.m. ET on
November 19, 2013. The replay can be
accessed by clicking on "Events" in the Investor Relations section
of the website.
About Endo:
Endo Health Solutions Inc. is a U.S.-based specialty healthcare
company with four distinct business segments that are focused on
branded and generic pharmaceuticals, devices and services, each
providing quality products to our customers while improving the
lives of patients. Through our operating companies – AMS, Endo
Pharmaceuticals, HealthTronics and Qualitest – Endo is dedicated to
finding solutions for the unmet needs of patients. Learn more at
www.endo.com.
About Paladin Labs:
Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty
pharmaceutical company focused on acquiring or in-licensing
innovative pharmaceutical products for the Canadian and world
markets. With this strategy, a focused national sales team and
proven marketing expertise, Paladin Labs has evolved into one of
Canada's leading specialty
pharmaceutical companies. Paladin Lab's shares trade on the Toronto
Stock Exchange under the symbol PLB. For more information about
Paladin Labs, please visit the Company's web site at
www.paladin-labs.com.
No Offer or Solicitation
This communication is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote or approval in any jurisdiction
pursuant to the acquisition or otherwise, nor shall there be any
sale, issuance or transfer of securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended.
Additional Information
New Endo will file with the Securities and Exchange Commission
(the "SEC") a registration statement on Form S-4 that will include
the Joint Proxy Statement/Circular of Endo and Paladin Labs. Endo
and Paladin Labs plan to mail their respective shareholders the
Joint Proxy Statement/Circular in connection with the transactions.
INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE JOINT PROXY
STATEMENT/CIRCULAR AND OTHER RELEVANT DOCUMENTS WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT ENDO, PALADIN LABS, THE TRANSACTIONS AND RELATED MATTERS.
Investors and security holders will be able to obtain free copies
of the Joint Proxy Statement/Circular and other documents filed
with the SEC by Endo through the website maintained by the SEC at
www.sec.gov. Investors and security holders will be able to obtain
free copies of the Joint Proxy Statement/Circular and other
documents filed by Paladin Labs on the System for Electronic
Document Analysis Retrieval ("SEDAR") website maintained by the
Canadian Securities Administrators at http://www.sedar.com. In
addition, investors and shareholders will be able to obtain free
copies of the Joint Proxy Statement/Circular and other documents
filed by Endo with the SEC by contacting Endo Corporate Secretary
or by calling (484) 216-0000, and will be able to obtain free
copies of the Joint Proxy Statement/Circular and other documents
filed by Paladin Labs on the SEDAR website by contacting Samira
Sakhia or by calling (514) 669-5367.
Participants in the Solicitation
Paladin and Endo and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from the respective shareholders of Paladin Labs and Endo
in respect of the transactions contemplated by the Joint Proxy
Statement/Circular. Information regarding the persons who may,
under the rules of the SEC, be deemed participants in the
solicitation of the respective shareholders of Paladin and Endo in
connection with the proposed transactions, including a description
of their direct or indirect interests, by security holdings or
otherwise, will be set forth in the Joint Proxy Statement/Circular
when it is filed with the SEC. Information regarding Paladin's
directors and executive officers is contained in Paladin's Annual
Report for the year ended December 31,
2012, filed on the SEDAR website. Information regarding
Endo's directors and executive officers is contained in Endo's
Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Statements including words such as "believes,"
"expects," "anticipates," "intends," "estimates," "plan," "will,"
"may," "look forward," "intend," "guidance," "future" or similar
expressions are forward-looking statements. These
forward-looking statements may include, without limitation,
statements regarding the completion of the proposed transaction and
other statements that are not historical facts. Although Endo and
Paladin Labs each believe its forward-looking statements are
reasonable, they are subject to important risks and uncertainties.
Those include, without limitation, the failure to receive, on a
timely basis or otherwise, the required approvals by Endo and
Paladin Labs shareholders, the Superior Court of Quebec and applicable government and
regulatory authorities, the terms of those approvals, the risk that
a condition to closing contemplated by the arrangement agreement
may not be satisfied or waived, the inability to realize expected
synergies or cost savings or difficulties related to the
integration of Endo and Paladin Labs operations, the ability of the
combined company to retain and hired key personnel and maintain
relationships with customers, suppliers or other business partners,
or other adverse events, changes in applicable laws or regulations,
competition from other pharmaceutical companies, and other risks
disclosed in Endo and Paladin Labs's public filings, any or all of
which could cause actual results to differ materially from future
results expressed, projected or implied by the forward-looking
statements. The forward-looking statements in this press release
are qualified by these risk factors. As a result of these risks and
uncertainties, the proposed transaction could be modified,
restructured or not be completed, and actual results and events may
differ materially from the results and events contemplated in these
forward-looking statements and from historical results.
Neither Endo nor Paladin Labs assumes any obligation to publicly
update any forward-looking statements, except as may be required
under applicable securities laws, or to comment on expectations of,
or statements made by the other party or third parties in respect
of the proposed transaction. These forward-looking statements
are not guarantees of future performance, given that they involve
risks and uncertainties. Investors should not assume that any
lack of update to previously issued forward-looking statement
constitutes a reaffirmation of that statement. Continued
reliance on forward-looking statements is at investors' own
risk.
For more information regarding these and other risks and
uncertainties that Endo may face, see the section entitled "Risk
Factors" in Endo's Form 10-K, Form 10-Q and Form 8-K filings with
the SEC and as otherwise enumerated herein or therein.
For more information regarding these and other risks and
uncertainties that Paladin may face, see the section entitled
"Risks Related to Paladin Labs's Business" in Paladin's Information
Form for the year ended December 31,
2012 and the sections in Paladin's Management's Discussion
and analysis entitled "Concentration of Credit Risk and Major
Customers," "Liquidity Risk," "Foreign Exchange Risk," "Interest
Rate Risk," and "Equity Price Risk" contained in Paladin's Annual
Report for the year ended December 31,
2012 filed on the SEDAR website.
SOURCE Endo Health Solutions