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Endo to Acquire Auxilium Pharmaceuticals in a Cash and Stock Transaction


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Endo International plc and Auxilium Pharmaceuticals, Inc. have announced that they have entered into a definitive agreement under which Endo will acquire all of the outstanding shares of common stock of Auxilium for a per share consideration of $33.25 in a cash and stock transaction. The boards of directors of both companies have unanimously approved the transaction, which is valued at $2.6 billion, including the repayment and assumption of debt. The transaction will include an election mechanism for Auxilium stockholders to elect cash and stock, all-stock or all-cash consideration, subject to proration in accordance with the terms of the definitive agreement.

The per share consideration represents a premium of 55 percent to Auxilium's closing price on September 16, 2014, the day Endo made public its proposal for Auxilium. Subject to aggregate cash and equity consideration limits, Auxilium stockholders may elect one of three options with respect to transaction consideration: 100 percent equity which equates to 0.488 Endo shares per Auxilium share, 100 percent cash which equates to $33.25 per Auxilium share or a standard election of an equal mix of $16.625 in cash and 0.244 Endo shares per Auxilium share. The total cash consideration will not exceed 50 percent of the total equity value and the equity consideration will not exceed 75 percent of the total equity value.

"We are pleased to have reached this agreement with Auxilium, which we believe will create value for both Endo and Auxilium shareholders, as well as for patients, customers and employees," said Rajiv De Silva, president and chief executive officer of Endo. "By adding Auxilium's complementary commercial portfolio, we believe this transaction is aligned with our strategy of pursuing accretive, value creating growth opportunities. We intend to leverage Auxilium's leading presence in men's health, as well as our R&D capabilities and financial resources to accelerate the growth of XIAFLEX® and Auxilium's other products. We look forward to working with the Auxilium team to achieve the growth and synergy potential of this compelling strategic combination."

Adrian Adams, chief executive officer and president of Auxilium said, "We are proud of the work Auxilium has done to develop a portfolio of important products that are improving the lives of patients to create significant stockholder value. We believe this transaction is the culmination of those efforts. On behalf of the Auxilium Board and management team, I want to thank our dedicated employees, engaged partners and strategic advisors for their continued hard work and commitment, which have been instrumental in building Auxilium into the diversified specialty biopharmaceutical company it is today."

Strategic and Financial Benefits of Combination Position Endo for Future Growth and Value Creation
Highly Complementary Portfolio to Maximize the Value of Auxilium's Commercial Products: Upon completion of the transaction, Endo's pharmaceutical portfolio will have a broader offering of urology and orthopedic products that are natural complements to its current men's health and pain products. Endo expects to drive increased adoption and enhance the performance of Auxilium's XIAFLEX and accelerate development of the product in potential new indications. Endo also intends to leverage its resources to optimize Auxilium's other products, including TESTOPEL® and STENDRA®. Endo believes the combined company will be well positioned to drive organic growth across its portfolio and to capitalize on additional future strategic M&A opportunities.

Significant Synergy Opportunities: Given the complementary nature of the companies' product portfolios, Endo expects the combined company to achieve annual cost synergies of approximately $175 million. This synergy run-rate is expected to be fully realized on an annual basis in the first year after closing and includes Auxilium's reduction in annual operating expenses previously announced on September 9, 2014.

Strong Financial Profile: Following the completion of the transaction, Endo expects to have a strong financial profile with a solid balance sheet, enhanced cash flow and improved financial flexibility to continue to execute on its strategy. In addition, the significant synergy opportunity is expected to drive improved operating margins. The transaction is expected to be immediately accretive post-close and meaningfully accretive in each year thereafter.

QLT
Immediately prior to the entering into the merger agreement with Endo, Auxilium terminated its proposed merger agreement with QLT, Inc., in accordance with the terms of the QLT merger agreement.

Financing and Approvals
Endo intends to fund the cash portion of the transaction through a combination of existing cash on hand and committed debt financing from Citi.

The transaction is expected to close in the first half of 2015 and is subject to the approval of Auxilium's stockholders, regulatory approval in the U.S. and certain other jurisdictions, and other customary closing conditions.

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