Endo Pharma buying American Medical for $2.6B

[April 11, 2011]  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 the most recent closing price of American Medical Systems shares. Endo will also assume $312 million in American Medical's debt.

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.

Endo, of Chadds Ford, Pa., said the deal is part of its transition from a drugmaker to a health care company. It's the latest in a string of acquisitions for Endo, which paid $1.2 billion for Qualitest Pharmaceuticals, a maker of pain treatments and generic drugs, in December. In November, Endo acquired Penwest Pharmaceuticals for $144 million.

Endo had $1.72 billion in revenue in 2010. The company makes the Lidoderm pain patch, Fortesta testosterone gel, and the pain drugs Opana and Opana ER, among other products.

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.

Shares of American Medical Systems closed at $22.33 Friday, and have traded between $24.12 and $17.42 in the last year. Endo shares finished at $40.85 on Friday.

[Associated Press]

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