Endo to Acquire NuPathe

Zacks

Shares of Endo Health Solutions (ENDP) gained over 3% on Dec 16, with the company announcing its intention to acquire NuPathe Inc. (PATH) for an upfront cash payment of $2.85 per share or about $105 million.

Terms of the Deal

Apart from the $105 million upfront payment, Endo will also make cash payments of up to $3.15 per share provided Zecuity, NuPathe’s migraine treatment, achieves specific sales figures.  

Zecuity, approved in the U.S. in Jan 2013, will be launched by Endo in the first half of 2014. NuPathe will be receiving $2.15 per share if Zecuity sales in any four-quarter period exceed $100 million within nine years of launch. If sales exceed $300 million within that time span, Endo will be paying an additional $1.00 per share to NuPathe.

Endo expects significant cost synergies from the acquisition, which is expected to be completed in early 2014. The NuPathe acquisition is expected to be earnings-accretive within a year of the closing of the transaction.

Our Take

Zecuity will be a nice addition to Endo’s portfolio. This deal will also add pipeline candidates like NP201 (Parkinson’s disease) and NP202 (schizophrenia and bipolar disorder) to Endo’s portfolio. We note that this bolt-on acquisition deal was announced a few weeks after the company announced its intention to acquire Paladin Labs.

Endo carries a Zacks Rank #3 (Hold). Some better-ranked stocks include Actelion Ltd. (ALIOF) and Jazz Pharmaceuticals (JAZZ). Both stocks carry a Zacks Rank #1 (Strong Buy).

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