Endo to buy Auxilium at a premium for $2.6 billion
- Endo has agreed to purchase Auxilium for $33.25 per share—55% above the company’s value on September 16—for a total of $2.6 billion. Auxilium had previously balked at Endo's original $2.2 billion offer for the company, calling it a "significant" undervaluation.
- The purchase will help shore up Auxilium's strong men’s health franchise. Some of the products that come with the acquisition include Testim (a topical testosterone gel), Testopel (a testosterone pellet that is embedded underneath the skin), and Vivus' fast-acting ED pill Stendra, which was recently cleared for a revised label that allows Auxilum to market the drug as ready-for-use a mere 15 minutes before sex.
- Endo’s strategy is to build a big company by buying up lots of smaller companies—a strategy that has been compared to Valeant’s acquisition-based approach to growth, as Bloomberg notes.
Even as the FDA has started to question the safety of testosterone products, Endo is determined to build a stronger presence in the market. Together, Testim and Testopel generated $271 million in revenues in 2013.
Endo’s approach is Valeant-like in that the company’s strategy is to keep R&D costs low by snapping up companies that make lower-cost, lower-risk drugs. Although Endo is in acquisition mode, it has opted not to go after an inversion deal. However, Auxilium, which has its operations in the U.S., is incorporated in Ireland.