UPDATE 2-Endo buys Canada's Paladin to counter sliding sales

Tue Nov 5, 2013 1:42pm EST
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(Adds details, analyst comment; updates stock movement)

By Esha Dey

Nov 5 (Reuters) - U.S.-based specialty pharmaceutical company Endo Health Solutions Inc will buy Canadian peer Paladin Labs Inc to expand its presence in Canada and emerging markets, as generic competition for its top drugs squeeze sales.

The news sent Endo shares up as much as 33 percent, valuing Paladin - to be acquired in a cash and stock deal - at about $2 billion.

The deal, Endo's biggest acquisition since its $2.9 billion purchase of American Medical Systems in June 2011, will help Endo to add more products to its pain and women's health portfolio, as well as reduce its tax burden.

The complex deal structure will create a new Irish holding company, which will own both Endo and Paladin, to take advantage of Ireland's low tax rates.

"They (Endo) are getting good value for what they are paying for," Gabelli & Co analyst Kevin Kedra said.

"They are buying an asset that is going to be accretive and they are restructuring themselves, which is going to help their tax structure going forward."

Endo has been seeing its sales slide as its Lidoderm pain patch lost patent exclusivity and demand for its Opana painkiller fell due to mounting competition.   Continued...