Endo Deal Provides Tax Edge

Its acquisition of Paladin will allow Endo to reincorporate in Ireland with a lower tax rate.

Endo Health Solutions Inc.’s recent acquisition designed to lower its tax rate may be following Valeant Pharmaceuticals International Inc.’s blueprint for a lucrative takeover spree.

Endo shares are up 42 percent to a record after Chief Executive Officer Rajiv De Silva agreed last week to buy Canadian drugmaker Paladin Labs Inc. The deal will allow Endo to reincorporate in Ireland with a lower tax rate, giving it an edge as it pursues more pharmaceutical takeovers. It’s a tactic that helped Valeant make more acquisitions than any of its peers in the last three years and increase its stock price sevenfold, according to data compiled by Bloomberg.

Irish Taxes

“It’s a company in transformation right now,” Jason Gerberry, a Boston-based analyst at Leerink Swann LLC, said in a phone interview. “There’s an execution and management premium starting to factor into the stock because the new CEO has indicated what he’s trying to do with the company and he’s delivering on it.”

BioDelivery Sciences

De Silva told analysts on a conference call last week that he’s looking at acquisitions in the range of $250 million to $500 million. BioDelivery Sciences, which had a market value yesterday of $183 million and net cash of $37 million, may fit the bill for Endo, Molloy said.

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