Auxilium Pharmaceuticals Rejects $2.2B Bid From Endo International plc, While QLT Inc. Merger Looks More Likely
September 22, 2014
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
Auxilium Pharmaceuticals on Monday rejected a $2.2 billion bid for the company from Ireland-based specialty healthcare company Endo International plc , saying the proposal undervalues the company and is not superior to a competing merger offer from Canadian drugmaker QLT Inc. .
“The board has determined that Endo’s proposal significantly undervalues Auxilium,” the company said in a statement. “However, under the terms of the merger agreement with QLT, Auxilium maintains the right to engage in discussions with Endo and other third parties, subject to certain conditions in the merger agreement.”
Auxilium and QLT had agreed in June to a $345 million merger plan that would have a QLT subsidiary merger with Auxilium, with the parent company still domiciled in Canada’s more tax-friendly climate.
Under the deal, shareholders of Auxilium would receive 3.1359 QLT shares for each Auxilium share, with Auxilium eventually owning almost 80 percent percent.
As such, the bid from Endo last week was almost immediately met with trepidation from Auxilium. The company quickly put in place a so-called “poison pill” shareholder rights plan last week in an effort to thwart the unsolicited offer from Endo. 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.
Still Auxilium has left open the possibility that it could remain in talks with Endo over its non-binding proposal is to acquire Auxilium's outstanding shares for $28.10 per share in cash and stock.
The bid was a 31 percent premium to Auxilium's closing price on September 16 but was apparently not enough to tempt the company its acquisition territory.