Endo buys generics maker DAVA for $575M

Rajiv De Silva was named the CEO of Malvern-based Endo in 2013.
Rajiv De Silva was named the CEO of Malvern-based Endo in 2013.
Posted: June 26, 2014

The corporate shifting by Endo International P.L.C. continued Tuesday as the drugmaker said it will pay $575 million for privately held DAVA Pharmaceuticals in hopes of generating more revenue quickly.

Endo recently renamed itself and reregistered in Ireland after buying Paladin Labs in November, but most of its leaders operate from Malvern.

DAVA, which is based in Fort Lee, N.J., has 13 generic products on the market and generated $131 million in revenue in 2013, according to a statement by Endo.

Endo's chief executive officer, Rajiv De Silva, who started in 2013, previously worked at Valeant Pharmaceuticals, which has a reputation for aggressively trying to acquire other companies and then cutting expenses, including the research budget. Valeant is now trying to buy Botox maker Allergan.

Though it is not as big as Valeant, Endo has followed a similar path under De Silva. Earlier in June, Endo sold multiple compounds in the early stages of research to privately held AsanaBioSciences, L.L.C., for an undisclosed amount. Endo will get some money if those compounds turn into profitable drugs, but that is years in the future.

For Endo and De Silva, the future is now. With interest rates low and his company coming off a first-quarter net loss of $437 million, De Silva is looking to buy other companies to generate immediate revenue.

"DAVA is well-positioned for continued strong and highly predictable financial performance with its existing commercial portfolio and attractive near-term pipeline, and is a natural fit for our generics business," De Silva said in a statement. "With Endo's sharp focus, lean operating model, and improved execution within our core businesses, strategic acquisitions will continue to play a key role in maximizing our growth potential and cash flow to drive future value for Endo shareholders."

Sterne Agee financial analyst Shibani Malhotra wrote in a note to clients that "with a generics infrastructure in place from the Qualitest and Boca Pharmaceutical acquisitions in 2013, Endo should be able to leverage these assets as well as its lower tax rate to drive incremental adjusted" earnings. She also expects Endo to continue buying companies with revenue coming in the door.

Attorney David F. Jones, who is a partner and cochair of the employee benefits and executive compensation group at the Dechert law firm's Philadelphia office, assisted DAVA in the deal.


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