UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of the earliest event reported): May 18, 2015
ENDO INTERNATIONAL PLC
(Exact name of registrant as specified in its charter)
| Ireland | 001-36326 | Not Applicable | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S Employer Identification No.) |
| First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland | Not Applicable | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code 011-353-1-268-2000
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 8.01 | Other Events |
On May 18, 2015, Endo International plc, a public limited company incorporated under the laws of Ireland (the “Company”), issued a joint press release with Par Pharmaceutical Holdings, Inc., a Delaware corporation (“Par”), announcing that the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Par, Endo Limited, a public limited company incorporated under the laws of Ireland, Endo Health Solutions Inc., a Delaware Corporation, Banyuls Limited, a private limited company incorporated under the laws of Ireland (“Buyer”), Hawk Acquisition ULC, a Bermudian unlimited liability company (“Merger Sub”) and Shareholder Representative Services LLC, a Colorado limited liability company, solely as the Stakeholder Representative (as defined in the Merger Agreement), pursuant to which Merger Sub will merge with and into Par (the “Merger”), with Par surviving the Merger as a wholly owned subsidiary of Buyer. A copy of the joint press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein. In addition, the Company provided supplemental information regarding the Merger in connection with a presentation to investors. A copy of the presentation is attached hereto as Exhibit 99.2 and is incorporated by reference herein.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit Number |
Description | |
| 99.1 | Joint Press Release, dated May 18, 2015, of Endo International plc and Par Pharmaceutical Holdings, Inc. | |
| 99.2 | Investor Presentation of Endo International plc, dated May 18, 2015. | |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ENDO INTERNATIONAL PLC | ||||||
| Date: May 18, 2015 | By: | /s/ Matthew J. Maletta | ||||
| Name: | Matthew J. Maletta | |||||
| Title: | Executive Vice President, Chief Legal Officer | |||||
EXHIBIT INDEX
| Exhibit Number |
Description | |
| 99.1 | Joint Press Release, dated May 18, 2015, of Endo International plc and Par Pharmaceutical Holdings, Inc. | |
| 99.2 | Investor Presentation of Endo International plc, dated May 18, 2015. | |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Endo to Acquire Par Pharmaceutical, Strategically Expanding Generics Business to
a Top 5 Industry Leader
- Transaction valued at $8.05 billion is transformative for Endo, creating a powerful platform for
future growth and further strategic M&A
- Creates specialty pharmaceutical company with one of industry’s fastest growing generics businesses
and expanded product portfolio, pipeline, technology platform and manufacturing capabilities
- Positions Endo for long-term double-digit organic growth, strong cash flow and financial flexibility
- Accretive to non-GAAP diluted earnings per share within first 12 months with double-digit accretion
to non-GAAP diluted earnings per share expected in 2016
- Projected total operational and tax synergies of $175 million while strategically maintaining R&D
- Par CEO Paul Campanelli to join Endo to lead generics business
and join Executive Leadership Team
- Closing anticipated in 2H 2015
DUBLIN and WOODCLIFF LAKE, NJ, MAY 18, 2015 -- Endo International plc (NASDAQ: ENDP) (TSX: ENL) and Par Pharmaceutical Holdings, Inc. today announced that they have entered into a definitive agreement under which Endo will acquire privately-held Par from TPG in a transaction valued at $8.05 billion, including assumption of Par debt. The combination will create a leading specialty pharmaceutical company with a generics business that is one of the industry’s fastest growing and among the top five as measured by U.S. sales. It is also expected to help drive long-term double-digit revenue growth for Endo. The transaction has been unanimously approved by the Boards of Directors of Endo and Par, and is supported by the management teams of both companies. There are no further shareholder approvals required. The purchase price will consist of approximately 18 million shares ($1.55 billion of value based on the 10-day volume weighted average share price of Endo ending on May 15, 2015) of Endo equity and $6.50 billion cash consideration to Par shareholders. Endo has secured fully committed financing from Deutsche Bank and Barclays to fund the cash consideration. Endo expects to implement a permanent capital structure to finance the transaction prior to the close that would include a combination of cash, debt and an equity offering.
“Our generics business, Qualitest, continues to be an extremely attractive and effective growth driver for Endo. This transaction with Par builds upon our generics growth, adding a strong portfolio of high barrier-to-entry and attractive gross margin products while also transforming Endo, creating a powerful corporate platform for future growth and strategic M&A,” said Rajiv De Silva, President and CEO of Endo. “We believe the acquisition of Par underscores the continued execution of Endo’s value-driven M&A strategy and helps deliver on our goal of achieving double-digit revenue growth for the overall business over the long-term. We are also excited to welcome Paul Campanelli to the Endo leadership team. With more than 25 years of experience in the generics industry and nearly 15 years at Par, Paul has demonstrated a clear track record of success in innovation and strategic management in specialty generics.”
“This is an exciting time of growth and opportunity in the generics and specialty pharmaceutical arenas. Par Pharmaceutical is committed to significantly expanding our scope, capacity and capabilities to realize the maximum value of our rich and diversified product portfolio and R&D pipeline. We believe our combination with Endo best positions us to do so,” said Mr. Campanelli, CEO of Par Pharmaceutical. “We share Endo’s goal of developing and commercializing generic drugs in areas of greatest revenue potential, complex formulations and longer life cycles. I look forward to joining the Endo team and working together to achieve that goal.”
Par Pharmaceutical is a privately-held company that was acquired through a take-private transaction by an affiliate of TPG in 2012.
“Over the last three years, we have enjoyed partnering with the Par team to create a more diversified company with expanded capabilities, an enhanced product pipeline and more robust business development opportunities, all resulting in significant growth,” said Todd Sisitsky, managing partner of TPG Capital North America. “The success of Par, in part, reflects our continued focus and operational expertise in the growing healthcare industry. It has been a
pleasure to invest in such a great company and support Par’s outstanding management team as they have grown and diversified their business. As part of Endo, Par will be well-positioned to drive future growth and we look forward to continuing to participate in the company’s next chapter of success.”
Strategic Benefits Strongly Position Endo for Future Growth and Value Creation
| • | Acquisition Reshapes Generic Pharmaceuticals Landscape While Transforming Endo’s Platform for Future Growth |
With the addition of Par’s product portfolio and R&D pipeline, Endo’s already rapidly growing generics business unit is expected to become one of the largest and fastest growing in the industry, with double-digit revenue growth over the long-term and a broad product pipeline. The Par portfolio includes nearly 100 products in multiple dosage forms and delivery systems, including oral solids, oral suspensions, injectables and high barrier-to-entry products. This portfolio is highly profitable with increasing adjusted gross margins. The transaction is also expected to help drive double-digit growth for Endo’s overall business, expanding the company’s corporate scope, size and future M&A potential.
| • | R&D Pipeline Provides Attractive Long-Term Opportunity |
Par offers a solid pipeline consisting of more than 200 Abbreviated New Drug Applications (ANDAs), 115 of which were filed with the U.S. Food and Drug Administration (FDA) as of December 31, 2014. Approximately 33 percent of the filed ANDAs are potential first-to-file or first-to-market opportunities and 75 percent of the overall development portfolio consists of Paragraph IV and first-to-file programs – all of which could provide a period of market exclusivity if approved. It is expected that the Par R&D pipeline could generate approximately 20 to 25 ANDA filings each year in 2015, 2016 and 2017.
| • | Significant Operational & Tax Synergies |
Given the complementary nature of the companies’ generics portfolios and operations, Endo estimates the transaction will generate $175 million in operational and tax synergies that are expected to be realized within the first 12 months following the completion of the transaction, while strategically preserving investment in the R&D pipeline to help drive long-term organic growth.
| • | Strong Financial Profile Drives Shareholder Value |
Following the transaction’s completion, Endo expects to have an even stronger financial profile with enhanced cash flow and improved financial flexibility to continue to execute on its corporate strategy. The transaction is expected to be accretive to adjusted diluted earnings per share (EPS) within the first 12 months after transaction close and result in double-digit accretion to adjusted diluted EPS in full year 2016. For 2016, Endo anticipates that EBITDA generated by Par will translate into a transaction multiple of approximately 10 to 11 times pro forma adjusted EBITDA on a post-synergized basis.
| • | Continued Execution and Development of Leadership Team Position Endo to Achieve Corporate Goals |
Endo continues to deliver on its corporate strategy to build a leading global specialty pharmaceutical company and, ultimately, improving lives while creating value. This acquisition moves the company forward in its focus on maximizing the value of each of its core businesses, participating in business areas that offer significant growth and favorable margins and transforming its operating model to maximize growth potential and cash flow generation. It also adds to the leadership team at Endo, bringing the proven experience and expertise of Mr. Campanelli to lead and grow the company’s generics business.
| • | Robust Cash Flow Generation and Prudent Financing Structure Provides for Rapid De-Levering |
Endo anticipates that the transaction’s expected financing structure will consist of approximately 18 million Endo shares ($1.55 billion in value based on the 10-day volume weighted average share price of Endo ending on May 15, 2015) and $6.50 billion in cash consideration to Par shareholders. Endo has secured fully committed financing from Deutsche Bank and Barclays and intends to fund the cash consideration through a combination of cash, debt and an equity offering. This financing combination provides the ability for Endo to rapidly de-lever back to the three to four times net debt to EBITDA range in the 12 to 18 months following the close of the transaction. The structure also allows for future financial flexibility and continued execution of Endo’s M&A strategy.
The transaction is expected to close in the second half of 2015 and is subject to regulatory approval in the U.S. and certain other jurisdictions, as well as other customary closing conditions.
Advisors
Barclays, Deutsche Bank, and Houlihan Lokey acted as financial advisors to Endo. JP Morgan acted as financial advisor to Par and its shareholders. Skadden, Arps, Slate, Meagher & Flom, LLP were Endo’s legal advisors and Ropes & Gray, LLP acted as legal advisors to Par and its shareholders.
Conference Call and Webcast
Endo and Par executives will host a conference call at 8:30 AM ET to discuss today’s announcement. The conference call can be accessed by dialing (866) 497-0462 (U.S. dial-in) or (678) 509-7598 (international dial-in) and the passcode is 50504381. A replay of the call will be available from May 18, 2015 at 12:30 PM ET until 11:59 PM ET on June 1, 2015 by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406 (international) and by entering the passcode 50504381. Accompanying slides will be available on Endo’s website. Endo will webcast the call to all interested parties through its website: www.endo.com.
About Endo International plc
Endo International plc is a global specialty pharmaceutical company focused on improving patients’ lives while creating shareholder value. Endo develops, manufactures, markets and distributes quality branded pharmaceutical and generic pharmaceutical products as well as over-the-counter medications though its operating companies. Endo has global headquarters in Dublin, Ireland, and U.S. headquarters in Malvern, PA. Learn more at www.endo.com.
About Par Pharmaceutical Holdings, Inc.
Par is a specialty pharmaceutical company that develops, manufactures and markets safe, innovative and cost-effective pharmaceuticals that help improve patient quality of life. Par Pharmaceutical offers a line of high-barrier-to-entry generic drugs, while Par Specialty Pharmaceuticals provides niche, innovative brands. Par Sterile Products develops, manufactures and markets both branded and generic aseptic injectable pharmaceuticals. For press release and other company information, visit www.parpharm.com.
About TPG
TPG is a leading global private investment firm founded in 1992 with over $67 billion of assets under management and offices in San Francisco, Fort Worth, Austin, Dallas, Houston, New York, Beijing, Hong Kong, London, Luxembourg, Melbourne, Moscow, Mumbai, São Paulo, Shanghai, Singapore and Tokyo. TPG has extensive experience with global public and private investments executed through leveraged buyouts, recapitalizations, spinouts, growth investments, joint ventures and restructurings. The firm has a strong history of healthcare investing and its well-known investments include Aptalis, EnvisionRX, Fenwal, Healthscope, IASIS Healthcare, Immucor, IMS Health, Quintiles Transnational and Surgical Care Affiliates, among others. For more information visit www.tpg.com.
This press release does not constitute an offer to sell securities.
Forward Looking Statements
This press release contains “forward-looking statements” relating to the acquisition of Par by Endo. All statements other than historical facts included in this press release, including, but not limited to, the statements by Mr. De Silva, Mr. Campanelli and Mr. Sisitsky, and other statements regarding the timing and the closing of the transaction, the expected benefits of the transaction, the expected accretion to earnings resulting from the transaction, expected product approvals, Endo’s plans to operate Par and any assumptions underlying any of the foregoing, are forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or unknown, or unknown risks or uncertainties
materialize, actual results could vary materially from Endo’s expectations and projections. Risks and uncertainties include, among other things, uncertainties as to the timing of the acquisition; the possibility that various closing conditions to the transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay, or refuse to grant approval for the consummation of the transaction; that the FDA or other regulatory authorities do not approve any product(s) in the manner desired by Endo on a timely basis, or at all; that there is a material adverse change to Par; that the integration of Par’s business into Endo is not as successful as expected; the failure of Endo to achieve the expected financial and commercial results from the transaction; other business effects, including effects of industry, economic or political conditions outside Endo’s control; transaction costs; the outcome of litigation, actual or contingent liabilities; as well as other cautionary statements contained elsewhere herein and in Endo’s periodic reports filed with the SEC and Canadian securities regulators, including current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K. Given these uncertainties, you should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release. Endo expressly disclaims any intent or obligation to update these forward-looking statements except as required by law. Additional information about Endo is available at www.endo.com or you can contact the Endo Investor Relations Department by calling 484-216-0000. Additional information about Par is available at www.parpharm.com.
Regulation G Reconciliation
This press release references EBITDA, Non-GAAP diluted earnings per share and adjusted gross margin, which are financial measures that are not prepared in conformity with accounting principles generally accepted in the United States (GAAP). We refer to such measures as non-GAAP financial measures. We define EBITDA as net income before interest, taxes, depreciation and amortization. We define Non-GAAP diluted earnings per share as earnings per share attributable to Endo as calculated under GAAP, as adjusted to remove the effects of (1) certain upfront and milestone payments to partners; (2) acquisition-related and integration items, including transaction costs, earn-out payments or adjustments; (3) changes in the fair value of contingent consideration and bridge financing costs; (4) cost reduction and
integration- related initiatives such as separation benefits, retention payments, other exit costs and certain costs associated with integrating an acquired company’s operations; (5) excess costs that will be eliminated pursuant to integration plans; (6) asset impairment charges; (7)amortization of intangible assets; (8) inventory step-up recorded as part of our acquisitions; (9) non-cash interest expense; (10) litigation- related and other contingent matters; (11) gains or losses from early termination of debt and hedging activities; (12) foreign currency gains or losses on intercompany financing arrangements; (13) and certain other items that the we believe do not reflect our core operating performance; (14) the cash tax savings from acquired tax attributes; (15) the tax effect of the pre-tax adjustments above at applicable tax rates and certain other tax items. We define adjusted gross margin as total revenues, less cost of revenues, adjusted for amortization of intangible assets; certain upfront and milestone payments to partners; certain cost reduction and integration-related initiatives; inventory step-up recorded as part of our acquisitions; certain excess costs that will be eliminated pursuant to integration plans and certain other items that we believe do not reflect our core operating performance.
Our presentation of EBITDA, Non-GAAP earnings per share and adjusted gross margin may be different from non-GAAP financial measures presented by other companies. We believe that our presentation of non-GAAP financial measures provides useful supplementary information regarding operational performance because it enhances an investor’s overall understanding of the financial performance and prospects for future core business activities by providing a basis for the comparison of results of core business operations between current, past and future periods. Management uses non-GAAP financial measures to prepare operating budgets and forecasts and to measure performance against those budgets and forecasts on a corporate and segment level. Endo also uses non-GAAP financial measures for evaluating management performance for compensation purposes. We have not provided quantitative reconciliations of projected EBITDA, Adjusted earnings per share or adjusted gross margin because not all of the information necessary for quantitative reconciliation is available to us at this time without unreasonable efforts. This is due primarily to variability and difficulty in making accurate detailed forecasts and projections. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful.
Endo Contacts:
Investors/Media: Keri P. Mattox, (484) 216-7912
Investors: Jonathan Neely, (484) 216-6645
Media: Heather Zoumas-Lubeski, (484) 216-6829
Par Pharmaceutical Contact:
Steven Mock, (201) 802-4033
TPG Contact:
Media: Luke Barrett, (212) 601-4752
Media Contacts:
Joele Frank, Joele Frank, Wilkinson, Brimmer, Katcher, (212) 355 4449
Andy Brimmer, Jo Joele Frank, Wilkinson, Brimmer, Katcher, (212) 895-8611
# # #
Exhibit 99.2
Endo International plc
Par Pharmaceutical
Acquisition
May 18, 2015
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Forward Looking Statements
This presentation contains information relating to the acquisition of Par by Endo that includes or is based on “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act and Canadian securities legislation. These statements include statements regarding the timing and the closing of the transaction, the expected benefits of the transaction, the expected accretion to earnings resulting from the transaction, expected product approvals and Endo’s plans to operate Par. Forward-looking statements include the information concerning our possible or assumed results of operations. We have tried, whenever possible, to identify such statements by words such as “believes,”
“expects,” “anticipates,” “intends,” “estimates,” “plan,” “projected,” “forecast,” “will,” “may” or similar expressions. Wehave based these forward-looking statements on our current expectations of future events. Because these statements reflect our current views concerning future events, these forward-looking statements involve risks and uncertainties. If underlying assumptions prove inaccurate or unknown, or unknown risks or uncertainties materialize, actual results could differ material from those expressed in the forward-looking statements contained in this presentation. Risks and uncertainties include, among other things, uncertainties as to the timing of the acquisition; the possibility that various closing conditions to the transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay, or refuse to grant approval for the consummation of the transaction; that the FDA or other regulatory authorities do not approve any product(s) in the manner desired by Endo on a timely basis, or at all; that there is a material adverse change to Par; that the integration of Par business into Endo is not as successful as expected; the failure of Endo to achieve the expected financial and commercial results from the transaction; other business effects, including effects of industry, economic or political conditions outside Endo’s control; transaction costs; the outcome of litigation, actual or contingent liabilities; as well as other cautionary statements contained elsewhere herein and in Endo’s periodic reports filed with the Securities and Exchange Commission (SEC) and with securities regulators in Canada on the System for Electronic Document Analysis and Retrieval (SEDAR), including current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K. We do not undertake any obligation to update our forward-looking statements after the date of this presentation for any reason, even if new information becomes available or other events occur in the future, except as may be required under applicable securities law. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider this to be a complete discussion of all potential risks or uncertainties.
©2015 Endo Pharmaceuticals Inc. All rights reserved.
1
Non-GAAP Financial Measures
This presentation may refer to non-GAAP financial measures, including EBITDA and adjusted gross margin, which are financial measures that are not prepared in conformity with accounting principles generally accepted in the United States (GAAP). We define adjusted gross margin as total revenues, less cost of revenues, adjusted for amortization of intangible assets; certain upfront and milestone payments to partners; certain cost reduction and integration-related initiatives; inventory step-up recorded as part of our acquisitions; certain excess costs that will be eliminated pursuant to integration plans and certain other items that we believe do not reflect our core operating performance. Our presentation of EBITDA and adjusted gross margin may be different from non-GAAP financial measures presented by other companies. We believe that our presentation of non-GAAP financial measures provides useful supplementary information regarding operational performance because it enhances an investor’s overall understanding of the financial performance and prospects for future core business activities by providing a basis for the comparison of results of core business operations between current, past and future periods. Management uses non-GAAP financial measures to prepare operating budgets and forecasts and to measure performance against those budgets and forecasts on a corporate and segment level. Endo also uses non-GAAP financial measures for evaluating management performance for compensation purposes. Reconciliation of non-GAAP financial measures to the nearest comparable GAAP amounts have been provided within the appendix at the end of this presentation.
Additional Information
This presentation is provided for informational purposes only and is neither an offer to purchase nor a solicitation of an of fer to sell shares of Endo. Endo and Par shareholders should read any filings made by Endo with the SEC in connection with the proposed combination, as they will contain important information. Those documents, if and when filed, as well as Endo’s other public filings with the SEC, may be obtained without charge at the SEC’s website at www.sec.gov and at Endo’s website at endo.com. 2
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Par Pharmaceutical Acquisition: Overview
Endo to acquire privately-held Par for $8.05 billion
$1.55 billion in equity to Par shareholders
$6.5 billion cash consideration
Fully committed financing from Barclays and Deutsche Bank
Expected to be financed by combination of cash, term loans, bonds and an equity offering of ~$1.5 to $2 billion
Creates leading specialty pharmaceutical company with top five generics business as measured by U.S. sales1
2014 pro forma revenues of $4.2 billion
Unanimously approved by both companies’ Boards of Directors
Par CEO Paul Campanelli joins Endo to lead Generics business
Expected to close in 2H 2015, subject to regulatory and other customary closing conditions
No shareholder approvals required
1 Source: IMS Health LTM as of 10/31/14
©2015 Endo Pharmaceuticals Inc. All rights reserved.
3
Par Acquisition: Significant Value Creation
• Diversifies product portfolio and R&D pipeline
Capabilities
• Expands manufacturing and technology capabilities
Growth • Accretive to existing growth profile: expected to drive double-digit organic growth
Profile • Revenue: double-digit CAGR for pro forma revenue in the near- to mid-term
• EPS: expect adjusted diluted EPS to grow faster than revenues
Accretion • Accretive to adjusted diluted EPS within first 12 months with double-digit accretion to adjusted diluted EPS in 2016
• Operational and tax synergies of $175 million
Synergies
• Strategically preserving R&D pipeline
• Transaction multiple of 10-11x 2016 adjusted pro forma EBITDA
Transaction on a post-synergy basis
Multiple • Anticipate returns well in excess of cost of capital
• Enables de-levering to a projected 3-4x net debt to EBITDA in 12-18 months
4
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Compelling Strategic & Financial Rationale
Strategically expands product portfolio, R&D pipeline, capabilities and long-term growth drivers
Adds extensive range of dosage forms and delivery systems Focus on specialized, market leading products
Designed to accelerate Endo growth:
Double-digit revenue growth in mid-term, accretive to adjusted diluted EPS, meaningful synergies, increased generics adjusted gross margins Strong R&D pipeline capable of fueling long-term organic growth
Drives strategic expansion of overall corporate profile, scope, and size, establishing a powerful platform for future M&A
Strong cash flow expected to lead to rapid de-levering back to 3-4x net debt to EBITDA in 12-18 months
Aligned with Endo’s strategy of pursuing accretive, value-creating growth opportunities
Creates shareholder value and drives benefits for patients & customers
5
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Transaction Aligns with Endo’s Strategic Direction
Build a leading global specialty pharmaceutical company
Focus on maximizing the value of each of our core businesses
Participate in specialty areas offering above average growth and favorable margins
Transform operating model to maximize growth potential and cash flow generation
Continue our commitment to serving our patients & customers
Improving lives while creating value
6
@2015 Endo Pharmaceuticals Inc. All rights reserved.
Endo’s Execution of M&A Strategy Is Driving Value
Expanded Generics platform
Expanded Generics platform
Sharpened strategic focus on pharmaceuticals
Branded Generics
Int’l
Boca
Aug 2013
Sumavel DosePro
Apr 2014
DAVA
Jun 2014
AMS
Divestiture Mar 2015 Q3 2015 close
Par
May 2015
2H 2015 close
Paladin
Nov 2013
Established
Endo’s global presence
Somar
Apr 2014
Strengthened int’l platform
Auxilium
Oct 2014
Rebuilt Branded platform & pipeline
Aspen Portfolio
May 2015 Q3 2015 close
Transform Gx business; Drive long-term double-digit growth; expand corporate M&A platform
Note: Dates represent first public announcements of transactions
Additional transactions include: HealthTronics divestiture (January 2014), Natesto licensing (November 2014)
©2015 Endo Pharmaceuticals Inc. All rights reserved.
7
Endo’s Vision: Leading Specialty Pharmaceutical Co.
U.S. Branded
U.S. Generics International Pharmaceuticals
Transaction closed January 2015
8
Generic Pharmaceuticals: Current Landscape
US Generic Pharma Market ($B)
120 100 80 60 40 20 0
2010A 2011A 2012A 2013A 2014A 2015P 2016P
Substantial market opportunity for growth of generic products U.S. generics market growth expected to be driven by:
Aging population
Regulatory focus on increased access to drug benefits Role in healthcare cost containment Increasing scripts conversion vs. branded at 80-90%
Consolidation and maturation of competitors have stabilized the pricing environment Basis of competition shifting to quality, reliability and specialized capabilities
Benefiting players with commercial, legal and entrepreneurial savvy Specialty generics growing faster as a segment and securing higher gross margin
Source: Par and EvaluatePharma
9
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Endo + Par: Creates a Top 5 Generics Player
U.S. IMS Generics Sales
($ in billions) $10
$5
$0
[1]
PF [2]
GEP[3]
Source: IMS Health LTM as of 10/31/14, Wall Street research.
[1] Pro forma for acquisition of Par
[2] Pro forma for acquisition of Ranbaxy
[3] Pro form for acquisition of Hospira
10
About Qualitest
Founded in 1983 Acquired by Endo in 2010 Headquarters: Huntsville, AL
Manufacturing Facilities: Huntsville, AL & Charlotte, NC 1,750 employees
Double digit organic growth performance and outlook
Strong volume growth across balanced portfolio of over 700 products
Controlled substances, specialty generics, Liquids / semi-solids, commodity generics
Pipeline of approximately 90 programs Strong expertise in controlled substances
11
©2015 Endo Pharmaceuticals Inc. All rights reserved.
About Par Pharmaceutical
Founded in 1978
Headquarters: Woodcliff Lake, NJ
Manufacturing Facilities: NY/CT, MI, CA and India 2,000 employees
Privately-held pharmaceutical company operating in the U.S. as two business segments:
Generics : approx. 95 products with 215 pipeline programs
Multiple dosage forms and delivery systems with a focus on high barrier-to-entry products, Paragraph IV, first-to-file and first-to-market opportunities
Branded : 2 approved, marketed products
12
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Endo + Par: Broad Facilities Footprint
2.7m sf footprint establishes leading generics player with capacity for additional growth
Endo facility Par facility
13
Par: Evolution from 2012 to Today
2012
2014
Revenue ($mm)
Adj. Gross Profit Margin
# of ANDAs on File
Filed Market opportunity ($bn)
# of Technologies
$1,050 47% 85 $21bn
8
$1,309 52% 115 $37bn
14
14
Par Today: High-Value, Long-Term Growth Products
Focus of core business is attractive high-value generics
Paragraph IV, first-to-file and first-to-market opportunities
Specialized products that are difficult to manufacture and/or present complex legal and regulatory challenges, including the generics of:
Lovaza® (complex and difficult-to-source API) Precedex™ (unique dosage form) Luvox CR® (controlled-release product) Focalin XR (controlled substance)
Emphasis on market leading products
Majority of Par’s top 10 generic drugs by revenue are market leaders
Significant number of products are either exclusive or have two or fewer competitors
Current product base is relatively more profitable and longer-lived than competitors
Lovaza® is a registered trademark of GlaxoSmithKline; Precedex™ is a registered trademark of Hospira; Luvox CR® is a
15 registered trademark of Jazz Pharmaceuticals; Focalin XR is a trademark of Novartis AG
Par Snapshot: Extended Release Products Leader
Generics Extended Release (ER) market size: ~$10 billion1
Key market drivers: High barrier to entry Difficult to manufacture
Par is one of the largest suppliers of ER products
13% generics ER market share for Par in 20141
In 2014, Par offered 6 of the top 10 ER molecules, with two more in development1
Key Par ER products and 2014 revenues include:
Buproprion HCl ER - $84m Propafenone ER - $76m Lamotrigine ER - $41m Fluvoxamine ER - $24m
1 IMS data for year ended December 31, 2014
16
Par Snapshot: Injectables Products Driving Growth
Generics injectables market size: ~$20 billion1
Key market drivers: Difficult to manufacture High regulatory scrutiny
Par injectables capabilities rapidly expanding; goal to be leading generic injectables provider within 3-5 years
Par entered the market in 2014 with acquisition of JHP Pharmaceuticals Currently markets 8 generics and 12 branded products 15 products filed and 20 more in development
Par injectables net revenues in 2014: ~$140 million
1 IMS data for year ended December 31, 2014
17
Par R&D Strategy: Building a High-Value Pipeline
Par has a full suite of high-value, high barrier to entry product technologies in development, including:
ER oral solids Injectables Topicals Nasal sprays Ophthalmics Films
~60% of filed ANDAs (115 total) are alternative dosage forms ~70% of R&D pipeline (100 total) consists of alternative dosage forms, including:
32 potential First-to-File opportunities 6 potential First-to-Market opportunities
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Endo + Par: Expanded Internal Generics R&D Capabilities…
Technology
Dev. Programs
Oral Pre- Cont-Oral Topical Nasal Ophth- Sterile
Solid filled Patch Film API rolled NDA ANDA CRO Solid IR / Liquid Sprays almics Vials ER Syringe Subs
+ Capability development in process
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©2015 Endo Pharmaceuticals Inc. All rights reserved.
Endo + Par: …Drive a Diversified R&D Engine
Endo Filed ANDAs (50)
Par Filed ANDAs (115)
14%
6% 28%
6%
10%
0 18%
0 0 18%
18%
42%
11%
29%
Immediate Release Extended Release Injectables Topical Sprays/Nasal/Subling Ophthal Film Other SoftGel O C’s Liquids
20
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Endo + Par: …Drive a Diversified R&D Engine
Endo Pro Forma Filed ANDAs (165)
Liquids
OCs
Topicals 2% 4%
Soft Gels 5%
0 0 2% Immediate
0% Release
38%
16%
Other
8%
Injectables
25%
Extended
Release
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©2015 Endo Pharmaceuticals Inc. All rights reserved.
Endo + Par: …Drive a Diversified R&D Engine
Endo Programs in Development (52)
Par Programs in
Development (100)
>75% of Par Development programs are Paragraph IV / First-to-File
10% 4%
0 6%
6% 50% 2% 6%
0
17%
2% 5% 5%
3% 27% 9% 25% 24%
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©2015 Endo Pharmaceuticals Inc. All rights reserved.
Endo + Par: …Drive a Diversified R&D Engine
Endo Pro Forma Programs in Development (152)
Liquids Topicals
3%
Soft Gels 8%
1%Films 1% 1%
Ophthalmic Release Sprays / 5% Nasal / 35% 3% Sublingual Other 5%
16%
Injectables
22%
Extended Release
HALF of all Development programs are Paragraph IV / First-to-File
23
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Endo + Par: Significant Generics Growth Potential
Net Revenues ($000s) Pro Forma
$2,500 $2,000 $1,500 $1,000 $500
$0
2011 2012 2013 2014
Par Endo (Gx Only)
Adjusted Gross Margin
($000s) Pro Forma
$1,400
49%
$1,200
$1,000
$800
47%
$600 $400 $200
$0
2011 2012 2013 2014
Par Endo (Gx Only)
Adj Gross Margin expected to grow from high 40s% to low to mid 50s%
Source: Companies’ SEC filings, 2011-2015
Summary:
Financing Structure Provides Flexibility for Future M&A
Attractive de-levering profile
Strong cash flow leads to rapid de-levering
Expect to be back in the 3-4x net debt to EBIDTA range in 12-18 months
$8.05 Billion Transaction
$1.55 Billion Equity $6.50 Billion Cash
Consideration Consideration
Cash
Par Shareholders Term Loans
Bonds
~$1.5- $2B Equity Offering
Fully Committed Financing
25
Par Acquisition: Significant Value Creation
Capabilities Diversifies product portfolio and R&D pipeline
Expands manufacturing and technology capabilities
Accretive to existing growth profile: expected to drive double-digit
Growth organic growth
Profile Revenue: double-digit CAGR for pro forma revenue in the near - to mid-term
EPS: expect adjusted diluted EPS to grow faster than revenues
Accretive to adjusted diluted EPS within first 12 months with
Accretion double-digit accretion to adjusted diluted EPS in 2016
Synergies Operational and tax synergies of $175 million
Strategically preserving R&D pipeline
Transaction multiple of 10-11x 2016 adjusted pro forma EBITDA
Transaction on a post-synergy basis
Multiple Anticipate returns well in excess of cost of capital
Enables de-levering to a projected 3-4x net debt to EBITDA in 12-18 months
26
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Summary:
Endo + Par: A Leading Specialty Pharmaceutical Co.
Spec Pharma Landscape by Enterprise Value
($ in billions)
$100 $167 $103
$75
$62
$54
$50
$44
$33 $28
$25 $20
$12 $9
$8 $6
$0 PF
Source: FactSet. Note: Market data as of 5/15/15.
27
Summary:
Endo + Par: A Transformational Combination
Company
Size and Scale
Generics
(2014)
Generics R&D
Pipeline
Long Term Growth
Drivers
Enterprise Value:
~$20bn 2014 Revenue:
~$2.9bn
2014 Revenue:
~$1.1bn (+56% from 2013)
~90 programs
6 ANDAs to be filed in 2015
Expansion of branded and generic portfolio and R&D pipeline Continued investment in M&A and licensing opportunities
Enterprise Value: n/a 2014 Revenue:
~$1.3bn
2014 Revenue:
~$1.3bn
(+19% from 2013)
215 programs 115 filed ANDAs
100 programs in development
Strong performance from portfolio Attractive R&D pipeline Focus on specialized products with high adjusted gross margins
Enterprise Value:
~$28bn
Pro forma 2014 Revenue:
~$4.2bn
Pro forma 2014 Revenue:
~$2.4bn
~300 development programs >100 Paragraph IV,
FTF or FTM 25-30 new ANDAs per year
Top five in U.S. Gx sales New Gx capabilities
Operational synergies
Double-digit growth
Transformative platform
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Appendix
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Reconciliation of Par Non-GAAP Measures - EBITDA
30
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Reconciliation of Par Non-GAAP Measures – EBITDA (continued)
31
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Reconciliation of Par Non-GAAP Measures – Gross Margin
32
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Reconciliation of Endo (Gx Only) Non-GAAP Measures – Gross Margin
We define adjusted gross margin as total revenues, less cost of revenues, adjusted for amortization of intangible assets; certain upfront and milestone payments to partners; certain cost reduction and integration-related initiatives; inventory step-up recorded as part of our acquisitions; certain excess costs that will be eliminated pursuant to integration plans and certain other items that we believe do not reflect our core operating performance.
The table below provides reconciliations between our U.S. Qualitest Pharmaceutical segment’s adjusted gross margin to gross margin, which is determined in accordance with U.S. GAAP, for the years ended December 31 (in millions):
33
©2015 Endo Pharmaceuticals Inc. All rights reserved.
Endo International plc
Par Acquisition
May 18, 2015
©2015 Endo Pharmaceuticals Inc. All rights reserved.