Irish-incorporated pharmaceutical firm Endo International has agreed to buy Auxilium Pharmaceuticals for about $2.6 billion to gain testosterone products.
The transaction is the latest in a line of deals associated with “tax inversion”, whereby pharma giants acquire an operation in a low-tax domicile to reduce their tax bill.
Endo gained its Irish headquarters earlier year after buying the Dublin-based Canadian drugmaker Paladin.
The latest deal will see Endo paying $33.25 a share, and Auxilium holders will be able to choose cash, stock or a combination of the two.
Endo’s strategy is similar to that of Valeant Pharmaceuticals International. Valeant has grown by buying smaller companies for their product lines.
After making acquisitions, Endo then tries to cut research and development spending by focusing on lower-cost, lower-risk drugs.
As part of the sale to Endo, Auxilium has cancelled a previously-agreed plan to shift its legal address to Canada, through an inversion with QLT, a Vancouver- based biotechnology company, for $345 million in stock.
Auxilium is the second company to drop inversion plans since the US Treasury Department last month issued new rules to discourage the transactions.
The sale to Endo allows Auxilium to get the tax benefits of having a parent company incorporated abroad, without having to contend with the new Treasury rules.
-Bloomberg
