Auxilium Pharmaceuticals Institutes "Poison Pill" To Fend Off $2.2B Endo Pharmaceuticals Offer
September 17, 2014
By Krystle Vermes, BioSpace.com Breaking News Staff
Auxilium Pharmaceuticals Inc. (AUXL) has put in place a so-called “poison pill” shareholder rights plan in an effort to thwart an unsolicited, $2.2 billion offer from Endo International Plc (ENDP) tendered Tuesday.
With a poison pill, the target company attempts to make its stock less attractive to the acquirer, by either allowing existing shareholders (except the acquirer) to buy more shares at a discount, or giving them a significant discounted price after the merger.
That news sent Auxilium’s share price soaring 42 percent in early trading Tuesday, as investors apparently decided to double down on the possibility that the biotech firm could see a higher offer or other bidders.
Endo delivered a proposal valued at $2.2 billion to acquire all outstanding shares of Auxilium Pharmaceuticals Inc., and the move has apparently been met with strong opposition from Auxilium stakeholders.
The company said Wednesday it has not agreed to deal negotiations, but it will review the proposal, and also implement the shareholder rights plan and declare a dividend, saying it needed “sufficient time to make informed judgments.”
Auxilium management also stressed it will still be merging with biotechnology firm QLT Inc. (QLTI) in a $345 million stock deal that would find more favorable tax rates in Canada.
The bid was structured as a per share consideration of $28.10 in cash and stock transaction. The proposal represents a premium of 31 percent to Auxilium’s closing price on Sept. 16 of $21.52 and a 40 percent premium to the average closing price of Auxiliam shares for the previous 30 days.
Endo continued to press its case Tuesday, saying it felt its offer was strong and offered a lot of upside to Auxiliam shareholders. Endo develops, manufactures, markets and distributes pharmaceutical, generic and device products in countries around the world.
"Endo's proposal would provide Auxilium shareholders a substantial premium and immediate cash value for their investment in Auxilium, as well as the opportunity to participate in the upside potential of a leading global specialty healthcare company,"
"In light of the highly complementary nature of our two companies' commercial portfolios, the growth potential of Auxilium's Xiaflex and the significant synergy opportunities,” said Rajiv De Silva, president and chief executive officer of Endo, “We believe this compelling strategic combination would result in and create benefits for both Endo and Auxilium shareholders, as well as for patients, customers and employees."
The consideration will also include an equal mix of cash and Endo stock. Endo wants to fund the transaction through a combination of existing cash and debt financing.
"We expect that Endo's leading presence in men's health, combined with our R&D capabilities and considerable financial resources will accelerate the growth of Xiaflex and Auxilium's other products, enhancing the value of the combined company's portfolio,” said De Silva. “Endo stands ready to engage immediately with Auxilium, complete our confirmatory diligence, negotiate a definitive agreement and complete this exciting transaction."
Endo said the deal would provide potential global synergies which could offset a $75 million reduction in the annual operating expenses announced by Auxilium on Sept. 9 as a result of corporate restructuring.