Auxilium Adopts Poison Pill in Response to $2.2B Endo Bid

NEW YORK (The Deal) -- Auxilium Pharmaceuticals  (AUXL) has adopted a "poison pill" stockholder rights plan in response to an unsolicited $2.2 billion takeover proposal from Irish specialty drug maker Endo International plc.

The Chesterbrook, Pa., pharmaceutical company also said it was not withdrawing its merger with Canadian biotech QLT, announced June 26.

Endo went public with the bid for Auxilium Tuesday evening after it had received no response for several days from the target. Endo executives said they had approached Auxilium with the offer Friday, Sept. 12. Endo characterized the offer as "shareholder friendly," emphasizing the strategic fit of the companies.

The offer is only for Auxilium, and does not include QLT.

Auxilium is well into the process of buying eye drug biotech QLT for $346 million in stock and expects to close the deal in the fourth quarter. The FTC has already granted early termination under the Hart-Scott Rodino Act.

The Dublin company received a finance commitment from Deutsche Bank (DB)  for $225 million for the QLT acquisition.

While Auxilium is eager to grow, it is thwarted by its current cost structure, which led it to announce a restructuring program one week ago designed to save $75 million a year and help offset falling sales from its Testim testosterone gel. The measures include a plan to cut 30% of its workforce, eliminate one of its three sales forces, and focus R&D efforts on developing Xiaflex for further uses.

A merger with Endo could "at least double" those synergies, to $150 million, Endo President and CEO Rajiv De Silva told investors in a Tuesday conference call.

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