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Endo Pharma to Buy Qualitest for $1.2 Billion

Endo Pharmaceuticals will buy privately held U.S. generics company Qualitest Pharmaceuticals for about $1.2 billion in cash.
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NEW YORK (TheStreet) -- Endo Pharmaceuticals (ENDP) - Get Endo International Plc Report announced Tuesday that 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, and drawing down 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 be immediately accretive to adjusted earnings per share in the first full year after the close. Upon the deal closing, Endo anticipates that Qualitest would add bout $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.

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

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

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

-- Written by Andrea Tse in New York.

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