October 9, 2014 / 12:22 PM / in 3 years

UPDATE 2-Endo bolsters men's healthcare business with Auxilium deal

* Endo offers $33.25/share for Auxilium

* Auxilium terminates deal with QLT

* Auxilium shares rise as much as 11 pct to $33

* Endo shares down 5 pct (Adds analyst comments, background; updates shares)

By Ankur Banerjee

Oct 9 (Reuters) - Endo International Plc brought a successful end to its month-long pursuit of Auxilium Pharmaceuticals Inc, with the smaller rival choosing a sweetened offer over its agreement to buy Canadian eye-drug maker QLT Inc.

The $1.67 billion deal for Auxilium expands Endo's portfolio to include Xiaflex, which is approved to treat Peyronie's disease - a condition that causes painful erections - and Dupuytren's contracture, a disease that impairs a person's ability to use their fingers.

"Endo recognizes the value inherent to Xiaflex, given the drug's potential in multiple additional indications," Aegis Capital analyst Raghuram Selvaraju said in a note.

Auxilium's lead drug is also being evaluated for use in frozen shoulder syndrome - a condition characterized by stiffness and pain in the shoulder joint - and to smoothen cellulite, a condition that causes dimpling of the skin, especially on women's hips and thighs.

Auxilium shares were up about 10 percent at $32.61, slightly below Endo's offer of $33.25 per share in cash and stock. Endo shares were down 5 percent at $67.41.

Auxilium rebuffed a previous offer of $28.10 per share from Endo a month ago, saying it significantly undervalued the company.

The deal also brings Auxilium's testosterone gel Testim and Endo's testosterone replacement therapy Aveed under one roof.

The market for testosterone treatments includes skin patches, short-acting injections and topical gels. AbbVie Inc's AndroGel and Eli Lilly & Co's Axiron are some of the products currently on the market.

Endo faces a potentially shrinking market for Aveed, after an advisory panel to the U.S. Food and Drug Administration said last month that testosterone replacement therapies should be reserved for men with specific medical conditions that impair function of the testicles.

Endo said on Thursday that the deal was worth $2.6 billion, including the repayment and assumption of debt.

Auxilium will pay QLT $28.4 million to end its $346 million agreement, which was partly aimed at cutting Auxilium's tax bill by moving its headquarters to Canada.

Endo, valued at $10.9 billion, moved its tax domicile to Ireland from Pennsylvania last year when it bought Canadian drugmaker Paladin Labs Inc.

Auxilium shares touched a four-year high of $33 earlier in the session. More than 24 million shares were traded by 2.39 p.m. ET, making Thursday the stock's busiest day ever.

Endo said it intended to fund the cash portion of the deal through a combination of cash on hand and committed debt financing from Citi.

Citi is Endo's financial adviser and Sullivan & Cromwell LLP is its legal adviser. Auxilium's financial adviser is Deutsche Bank and Morgan Stanley, while Willkie Farr & Gallagher LLP and Morgan, Lewis & Bockius are its legal advisers. (Editing by Savio D'Souza and Simon Jennings)

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