Endo Pharmaceuticals to buy Qualitest

The privately held generics company will sell for about $1.2 billion in cash.

By TheStreet Staff Sep 28, 2010 11:24AM

By Andrea Tse, TheStreet


Endo Pharmaceuticals (ENDP) said Tuesday it will buy privately held U.S. generics company Qualitest Pharmaceuticals for about $1.2 billion in cash.


Endo said it intends to finance the purchase using $500 million in cash from its balance sheet, plus an existing $300 million revolving credit facility. The company also said it has secured financing for up to $400 million. The transaction is expected to close late in the fourth quarter or early in the first quarter of 2011.


The company expects the transaction to immediately add to earnings in the first full year after the close. After the deal closes, Endo anticipates Qualitest will add about $400 million in annualized revenue and 40 cents in annualized adjusted earnings per share.


Endo also expects revenue growth of the combined generics business to be at least 15% over the next two years. The company expects to realize a $30 million annualized cost synergy run-rate in 2013.

Pro forma for fiscal 2010, the combined company would have had revenue of about $2 billion and more than 3,000 employees, Endo said.


Endo said Qualitest is the sixth-largest U.S. generics company, as measured by prescriptions filled.


Endo reiterated its 2010 revenue guidance of between $1.63 billion and $1.68 billion and full-year adjusted earnings per share of between $3.30 and $3.35. Analysts, on average, expect full-year earnings of $3.35 a share on revenue of $1.67 billion.


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