Endo Health Solutions Inc. Snaps Up Paladin Labs Inc. for $1.6 Billion
Published: Nov 05, 2013
Paladin Labs Inc. to be Acquired by Endo Health Solutions Inc. for $77 per Share
MONTREAL, CANADA--(Marketwired - Nov. 5, 2013) - THIS MEDIA RELEASE IS NOT FOR DISTRIBUTION TO THE UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Paladin Labs Inc. (TSX:PLB) ("Paladin") today announced that it has reached a definitive agreement to be acquired by Endo Health Solutions (NASDAQ:ENDP) ("Endo"), a leading U.S.-based specialty pharmaceutical company, in a stock and cash transaction valued at approximately $1.7 billion. Pursuant to the acquisition, both Endo and Paladin will be acquired by a newly-formed Irish holding company ("New Endo"). At $77 per Paladin share, the transaction represents a 20% premium to the Paladin closing share price on November 4, 2013 of $63.91 and a 25% premium to Paladin's 3 month volume weighted average share price of $61.67.
"It takes about 17 years of tough, hard work by many talented people to become an overnight success. We're proud that we were able to record 17 years of consecutive record revenues which drove a 51 times increase in Paladin's share price since our founding," said Jonathan Ross Goodman, Chairman of Paladin.
"We're also proud of this agreement which marks the beginning of a relationship with Endo where we will work together to expand our proven business model globally," said Mark Beaudet, Interim CEO of Paladin.
Paladin will continue to be led by Paladin Labs' current management, will maintain its Montreal headquarters, and will operate in Canada under its current name, Paladin Labs Inc.
Under the terms of the agreement, which has been unanimously approved by the boards of both companies, Paladin's shareholders will receive 1.6331 shares of New Endo stock and $1.16 in cash, subject to adjustment, for each Paladin share they own upon closing, pursuant to a plan of arrangement under Canadian law. In addition, Paladin's shareholders will receive one share of Knight Therapeutics Inc. ("Knight"), a newly- formed public company in Canada. Knight will own Impavido(R), an approved Paladin product indicated for the treatment of leishmaniasis with international sales of approximately $2.5 million dollars, certain rights associated with that product and $1 million in cash.
The transaction values each Paladin share at $77.00, based on the 5 day volume weighted average price (VWAP) of Endo shares and the 5 day average currency exchange rate calculated at close of market on Friday, November 1.
The cash consideration to be received by Paladin shareholders will be increased if Endo's 10 day VWAP during the agreed reference period declines by more than 7%. Full cash compensation (on a U.S. dollar basis) will be provided by Endo to Paladin shareholders for any share price declines of 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 cash compensation (on a U.S. dollar basis) for one half of the incremental decline to Paladin shareholders. Declines in Endo's share price beyond 24% will not be subject to further cash compensation to Paladin shareholders. The maximum amount potentially payable to Paladin shareholders under this price protection mechanism is US$233 million.
Paladin expects this transaction to be fully taxable to Paladin's Canadian shareholders. Shareholders should consult their own tax and other advisors with respect to the transaction.
Paladin shareholders will receive a management proxy circular for a special meeting to be held to approve the transaction which will include further details about the transaction and New Endo.
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 at special meetings, the approval of the Superior Court of Quebec, the registration and listing of New Endo shares and other customary closing conditions. Shareholders representing approximately 34% of Paladin's 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% during an agreed reference period.
Credit Suisse is acting as financial advisor to Paladin, Davies Ward Phillips & Vineberg LLP is acting as legal counsel and EY provided transaction advisory support. Shareholders should consult their own tax and investment advisors with respect to the Arrangement, details of which can be found at www.sedar.com.
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.
Endo Health Solutions Inc. (Endo) 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 Labs'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.
This press release may contain forward-looking statements and predictions. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The Company considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but cautions that these assumptions regarding the future events, many of which are beyond the control of the Company and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations, are discussed in the annual report as well as in the Company's Annual Information Form for the year ended December 31, 2012. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information or future events and except as required by law. For additional information on risks and uncertainties relating to these forward-looking statements, investors should consult the Company's ongoing quarterly fillings, annual report and Annual Information Form and other fillings found on SEDAR at www.sedar.com.
Samira Sakhia, CPA, CA, MBA
Chief Financial Officer
Paladin Labs Inc.
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