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Endo to acquire outstanding shares of BioSpecifics for $540M

Oct. 19, 2020 8:31 AM ETEndo International plc (ENDPQ), BSTCENDPQ, BSTCBy: Meghavi Singh, SA News Editor15 Comments
  • Endo International (NASDAQ:ENDP) has agreed to acquire all of the outstanding shares of BioSpecifics Technologies (NASDAQ:BSTC) for $88.50 per share in cash, representing an aggregate equity value of  ~$540M (net of ~$120M in cash acquired).
  • Under the terms of the merger agreement, Endo through a wholly owned subsidiary, will commence an all-cash tender offer to acquire 100% of the outstanding common stock of BioSpecifics for $88.50 per share.
  • Upon the successful completion of the tender offer, Endo's acquisition subsidiary will be merged into BioSpecifics, and the remaining shares of BioSpecifics will be canceled and converted into the right to receive the same consideration payable pursuant to the tender offer.
  • The transaction is expected to close in late 2020 and Endo expects to fund the transaction with cash on hand.
  • ENDP  shares down 2% and BSTC shares up 44.2% PM.

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Comments (15)

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Sorry for a naive question; before yesterday, I have never owned shares in a company that got taken over or bought by another company. Will the BSTC ticker symbol change to ENDP?
@arsenal50, since it's an all cash deal, if it goes through, your shares of BSTC will disappear and you will receive cash for the value of the shares at buyout.
@billygoatsgruff: Thanks a lot for your reply. It is very much appreciated. I might reinvest the cash from my BSTC shares into ENDP. The BSTC cellulite treatment is going to be a blockbuster for ENDP! The main reason I bought shares in BSTC was in anticipation of their cellulite treatment hitting the market next year after FDA approval 4 months ago.
"Endo's acquisition subsidiary will be merged into BioSpecifics, and the remaining shares of BioSpecifics will be canceled and converted into the right to receive the same consideration payable pursuant to the tender offer." Could they be setting up shop in the new subsuduary that merges into BSTC in order to leave nothing in ENDP for the potential bankruptcy/slash opiod settlement. Why not move all the assets/future business into BSTC and leave a poor teetering shell for the litigants to negotiate with. Any thoughts???
RickinMiami profile picture
Interesting idea @frdmhr $MNK was planning something similar, $BHC is planning eye care spinoff, however I am not sure ENDO's name caries such a bad stigma to merit total re-branding. I think the admin SG&A costs would go up if ENDO were to split. Also, based on population of counties where a settlement has occurred, extrapolating to all US population would be 1 billion (but those counties were much more highly affected than opioids than the average US population so extrapolated damages should be less).
This stock remains ridiculously cheap, just not insanely so when it was trading at $2.80 not so long ago. Settlement will be and always was going to be manageable, now maybe saner minds will prevail and look past that and see ENDP can earn $2.50 in 2021. P/E of 8 still seems very reasonable. It's a $20 stock selling for 5 and change and a forward P/E of 2.2.
Opiod settlement obviously (hopefully) fixed - see alsoJNJ remarks from 10/13/2020 - so finally Endp has the chance to multiple Earnings and PPS.
Good move. If ENDP would move to BK, they woudn‘t have bought.
RickinMiami profile picture
So ENDP was so far paying about 32 million/year in royalties for Xiaflex

Would have been going up dramatically with Cellulite in 2021-2022, assuming cellulite would be double the cost for Dupuytren and Peyronies 64 million/yr. So total cost to ENDO would be around 100 million/year conservatively starting 2022.

They basically pay 5X 2022 royalty costs and going forward that cost becomes gross profit for ENDP.

Seems like a fair deal and incentive for ENDP to go all out on Cellulite indication.

To me this also signals some certainty/clarity of Opioid Liability, it says the liability upper limit is known.

GLTA Go Longs!
19 Oct. 2020
@RickinMiami always enjoy seeing your take on ENDP articles. I agree, positive news!
RickinMiami profile picture
Thanks @LR83 hopefully patience will get us some rewards, the opportunity costs of holding ENDP have been staggering for me over the last few years. I am glad that since last week my net position is above breakeven.. finally! The thesis since a couple of years ago remains in tact and is materializing faster now so I see Endo revisiting mid double digits in a few months time.
@RickinMiami I also appreciate your take on ENDP- Thanks
looks like a good move! they've found their niche and want to dominate it. time to pick up shares at a lower price
This is interesting, as BioSpecifics Technologies Corp is highly thought of on the Street. Wonder how ENDP management pulled this off? I may have not been giving ENDP mgmt enough credit. Time to re-assess and re-evaluate....

The best of fortune to us all
My take is BSTC's new CEO realized they had a terminal value problem with patients expiring in 8-10ish years, Either use the cash on hand to find another drug to develop or sell out to Endo for a fair offer. I'd imagine a lot of the BSTC shareholders were close to the company given the limited outstanding shares. Nice little pay day for them and a solid deal for endo.
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