TPG Capital sells Par Pharmaceutical to Endo in $8.05bn deal

July 2015 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

Endo International plc and Par Pharmaceutical Holdings, Inc. announced that they have entered into a definitive agreement under which Endo will acquire the privately-held Par from TPG Capital in a $8.05bn deal.

The Endo/Par combination will create a leading specialty pharmaceutical company with a generics business that is one of the industry’s fastest growing and among the top five as measured by US sales. It is also expected to help drive long-term double-digit revenue growth for Endo and provide a broad product pipeline.

The Par portfolio includes nearly 100 products in multiple dosage forms and delivery systems, including oral solids, oral suspensions, injectables and high barrier-to-entry products. This portfolio is highly profitable with increasing adjusted gross margins. The privately-held Par Pharmaceutical was acquired through a take-private transaction by an affiliate of TPG Capital in 2012.

Given the complementary nature of the companies’ generics portfolios and operations, Endo estimates the transaction will generate $175m in operational and tax synergies that are expected to be realised within the first 12 months following completion of the transaction, while strategically preserving investment in the R&D pipeline to help drive long-term organic growth.

The transaction has been unanimously approved by the boards of directors of Endo and Par, and is supported by the management teams of both companies. There are no further shareholder approvals required. The purchase price will consist of approximately 18 million shares ($1.55bn of value based on the 10-day volume weighted average share price of Endo ending on 15 May 2015) of Endo equity and $6.50bn cash consideration to Par shareholders.

“This transaction with Par builds upon our generics growth, adding a strong portfolio of high barrier-to-entry and attractive gross margin products while also transforming Endo, creating a powerful corporate platform for future growth and strategic M&A,” said Rajiv De Silva, president and chief executive of Endo. “We believe the acquisition of Par underscores the continued execution of Endo’s value-driven M&A strategy and helps deliver on our goal of achieving double-digit revenue growth for the overall business over the long-term. We are also excited to welcome Paul Campanelli to the Endo leadership team. With more than 25 years of experience in the generics industry and nearly 15 years at Par, Paul has demonstrated a clear track record of success in innovation and strategic management in specialty generics.”

To fund the cash consideration, Endo has secured fully committed financing from Deutsche Bank and Barclays. Endo also expects to implement a permanent capital structure to finance the transaction prior to the close that would include a combination of cash, debt and an equity offering.

“This is an exciting time of growth and opportunity in the generics and specialty pharmaceutical arenas,” said Paul Campanelli, chief executive of Par Pharmaceutical. “We share Endo’s goal of developing and commercialising generic drugs in areas of greatest revenue potential, complex formulations and longer life cycles. I look forward to joining the Endo team and working together to achieve that goal.”

Todd Sisitsky, managing partner of TPG Capital North America, commented: “It has been a pleasure to invest in such a great company and support Par’s outstanding management team as they have grown and diversified their business. As part of Endo, Par will be well-positioned to drive future growth and we look forward to continuing to participate in the company’s next chapter of success.”

The financial advisers for Endo during the transaction were Barclays, Deutsche Bank and Houlihan Lokey. For Par and its shareholders, JP Morgan acted as financial adviser. The legal adviser to Endo was Skadden, Arps, Slate, Meagher & Flom LLP. Ropes & Gray LLP acted as legal adviser to Par and its shareholders.

Fraser Tennant