|Endo CEO Rajiv De Silva|
Endo Health Solutions ($ENDP) is shopping its medical device unit American Medical Systems. The Minnetonka, MN-based company was recently in the news for settling many of its vaginal mesh-related lawsuits, and has caught the attention of private-equity firms and other health care companies.
Citing unnamed sources, The Wall Street Journal said the unit could garner about $2 billion for Endo, which would be less than the $2.9 billion it paid for AMS just three years ago. It was not clear, the newspaper reported, why the unit is now up for sale.
Perhaps Endo is following the rest of the pharma pack in looking to divest themselves of smaller units so they can focus on their core, market-leading products. Earlier this month, Endo completed its $600 million purchase of generic pharmaceutical company Dava Pharmaceutical.
In May, Boston Scientific ($BSX) announced it was buying Bayer AG's interventional division for $415 million to beef up its device offerings for the treatment of peripheral vascular disease. Bayer itself recently spent $14.2 billion to acquire Merck's ($MRK) consumer care and over-the-counter products. In April, Glaxo ($GSK), Eli Lilly ($LLY) and Novartis ($NVS) engaged in a three-way swap of business units (as well as cash) to focus on their areas of expertise.
Another possible reason for the sale could be tax inversion, though the WSJ said it was unclear if a buyer would be able to take advantage of the popular but controversial move by health care companies to avoid U.S. taxes by shifting their corporate domiciles overseas. Earlier this year, the previously Malvern, PA-based Endo bought Canada's Paladin Labs--also a drugmaker--for $1.6 billion, allowing it to domicile in Ireland, which has much lower tax rates.
The wave of tax inversions in the industry has triggered a political backlash that pressured Walgreens ($WAG) to abandon the tax-saving element of its merger with UK-based Alliance Boots. Still, others like Medtronic ($MDT) appear ready to battle. Earlier this month, Medtronic hired former senators John Breaux (D-LA) and Trent Lott (R-MS) and three others as lobbyists to combat anti-inversion legislation that threatens its planned merger with Irish device maker Covidien ($COV).
In May, Endo announced it would pay $830 million to settle 20,000 lawsuits stemming from AMS vaginal mesh-related cases. The settlement, the company said, would resolve a "substantial majority" of those lawsuits.
- read the WSJ story (sub. req.)