NEW YORK (AP) — Endo Pharmaceuticals Holdings Inc. said Monday it is buying urology and pelvic health company American Medical Systems Inc. for about $2.6 billion.
Endo is offering $30 a share — a premium of 34 percent to Friday’s closing price of American Medical Systems shares. Endo will also assume $312 million in American Medical’s debt.
American Medical Systems stock jumped $7.17, or 32 percent, to $29.50 in morning trading.
American Medical Systems makes devices and therapies for pelvic health, urology, and gynecology. The Minnetonka, Minn., company reported $542.3 million in sales in 2010. Almost half its revenue comes from sales of men’s health products and drugs for urinary incontinence and impotence. It also sells urinary incontinence and vaginal prolapse products for women’s health, and markets laser therapies for enlarged prostate.
In recent years Endo, of Chadds Ford, Pa., has diversified its focus from pain drugs to include generic drugs and medical devices. The company reported $1.72 billion in revenue in 2010, with $783 million — or 45 percent– coming from sales of the Lidoderm pain patch. But the patents supporting Lidoderm will begin to expire in 2015, and Endo says it is transforming from a drug company into a health care company.
Endo said it will get about 30 percent of its revenue from medical devices after acquiring American Medical Systems, and will do more business outside the U.S. Lidoderm will also bring in about 30 percent of its revenue, Endo said.
The deal is Endo’s fourth in less than a year. Last July it acquired urology company HealthTronics for $223 million, and bought Penwest Pharmaceuticals in November for $144 million. Penwest had been Endo’s partner on its pain drugs Opana and Opana ER. In December the company paid $1.2 billion for Qualitest Pharmaceuticals, a maker of pain treatments and generic drugs.
Endo’s other products include Fortesta testosterone gel.
The boards of both companies approved the sale, and Endo said the deal should close late in the third quarter. After the deal, Endo will have about 4,000 employees.
Endo said the deal will reduce its profit by 61 cents per share in 2011 and about 5 cents per share in 2012. It said the deal will boost its profit by 25 cents per share in 2013. Endo expects about $50 million in cost savings by that year.
Standard & Poor’s Ratings Service said it is placing its ratings on Endo under review and will likely lower its rating after the sale closes. Standard & Poor’s currently rates Endo’s credit at ‘BB+,’ which is “junk status” and one notch below investment grade.
Endo shares climbed $2.42, or 5.9 percent, to $43.27 in morning trading.
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