Auxilium to mull Endo's offer - and initiate poison pill

Chesterbrook drugmaker Auxilium Pharmaceuticals responded Wednesday to an unsolicited takeover offer from Endo International P.L.C. by saying it would look at the offer, as required by financial regulations, but also would institute a poison-pill stock-dividend plan to ward off Endo.

Endo valued the cash-and-stock offer at $28.10 per share, or $2.2 billion, but it did not specify how much of that total was stock and how much was cash.

Endo chief executive officer Rajiv De Silva sent the takeover letter to Auxilium CEO Adrian Adams on Friday night, then went public with the offer Tuesday after the stock market closed in New York.

Auxilium responded with a statement Wednesday and posted on its website a link to De Silva's letter.

Formerly based in Chadds Ford and then Malvern, Endo officially moved its headquarters to Dublin in February after a separate acquisition announced in 2013 allowed it to register in Ireland for the sake of lower corporate taxes than it had been paying in the United States. Most of Endo's leadership still operates from Malvern, however.

Auxilium is in the middle of buying a Canadian company, QLT Inc., also for the sake of paying lower corporate taxes. But De Silva's letter said the Endo offer was a better move for Auxilium shareholders and did not include QLT.

"Consistent with its fiduciary duties and in accordance with its existing merger agreement with QLT Inc., Auxilium's board of directors, in consultation with its financial and legal advisers, will carefully review all aspects of the Endo proposal," Auxilium said in its statement. "The board is not withdrawing, modifying, withholding, changing, or qualifying its recommendation with respect to its existing merger agreement with QLT Inc., or proposing to do so."

Auxilium had 639 employees at the end of 2013, but the company said last week it would lay off about 30 percent of its workforce, meaning about 200 jobs. Before the cuts, about 160 people worked at its headquarters and about 130 at a factory in Horsham.

Auxilium cited declining sales of testosterone-replacement medications, which Endo also produces. An FDA advisory committee voted 20-1 Wednesday to recommend tighter restrictions on labels for such products because they show little evidence of effectiveness, and some reports suggest they can increase the chance of heart attack and stroke.

If the Endo takeover goes through, more people will likely lose jobs. Auxilium had said its cuts would eventually mean $75 million in savings.

"Based on what we know now," De Silva said, according to Bloomberg News, "we are confident in our ability to at least double the $75 million of cost reductions that Auxilium has announced."