Endo Pharmaceuticals (NASDAQ:ENDP) is set to acquire medical device provider American Medical Systems (NASDAQ:AMMD) for US$2.9 billion in cash, which includes the repayment of $312 million of debt.
The $30.00 per share offer set a fire under American Medical Systems share price this morning, pushing shares in the company 32% higher to $29.46 – just below the offer price – suggesting the market does not expect to see a rival bid emerging.
Indeed, Endo Pharmaceutical share price also rose on the announcement, adding more than 5% - a clear sign that the market approves the transaction. Endo is currently capitalized at just under US$5 billion, so this is certainly a chunky acquisition.
:The combined company will be positioned to deliver more comprehensive healthcare solutions across its diversified businesses in branded pharmaceuticals, generics and devices and services, in the key therapeutic areas of urology and pain,” Endo stated this morning.
American Medical specialized in medical devices used in pelvic health, serving urologists, urogynecologists, and gynecologists. Approximately 73% of the company’s sales are generated in the United States.
The combined company with have approximately 4,000 employees, revenues of approximately $3 billion and EBITDA of approximately $1 billion in 2011.
" We are creating a company uniquely positioned to respond to the changing healthcare environment and the competitive, rapidly consolidating industry landscape,” stated Dave Holveck, President and CEO of Endo.
“Through the acquisition of AMS, we will gain scale in devices and services, and will be positioned as a leading provider of healthcare solutions in the field of pelvic health, with a full spectrum of product offerings ranging from pharmaceuticals to medical devices."
Endo further noted that the acquisition would be immediately earnings accretive. The combined entity is expected to generate $50 million in cost synergies by 2013.
Endo also reiterated its stand alone 2011 revenue guidance of between $2.35 to $2.45 billion and full year adjusted diluted earnings per share to be between $4.20 to $4.30 per share.