American Medical Systems to be Sold for $2.9B

Endo Pharmaceuticals has agreed to buy the company in an all-cash deal that's expected to close in the third quarter of 2011.

American Medical Systems, Inc., (AMS) has agreed to be bought for $2.9 billion in cash, or $30 per share.

The buyer is Endo Pharmaceuticals, a Newark, Delaware-based specialty health-care solutions company that's focused on high-value branded products and specialty generics.

The deal, which has been approved by both companies' boards, includes assumption and repayment of $312 million of AMS debt. It is expected to close in the third quarter of 2011 and is pending approval by AMS stockholders and antitrust authorities. Following the close of the transaction, AMS will operate as a independent subsidiary of Endo.

Minnetonka-based AMS was founded in 1972 and became public in 2000. Its medical devices and therapies help restore pelvic health-specifically, they treat incontinence, erectile dysfunction, benign prostatic hyperplasia, pelvic floor prolapse, and other pelvic disorders in both men and women.

Endo said Monday that the acquisition will assist in its evolution from a product-driven company to a health-care solutions provider and that it will strengthen Endo's urology franchise while diversifying revenue, earnings, and cash flow.

Meanwhile, AMS CEO Mark Heggestad told Twin Cities Business Monday morning that AMS' capabilities complement Endo's-AMS offers medical devices in the urology arena and Endo offers pharmaceuticals. Working together, the companies will be able to go to urologists with a broad suite of solutions and take advantage of “revenue synergies.”

Additionally, Endo's resources and AMS' global footprint will enable the companies to pursue additional opportunities overseas, Heggestad said. Approximately 27 percent of AMS' 2010 revenue came from international sales; Endo, by contrast, has focused its efforts thus far on the U.S. but wants to branch into international markets.

Working together “gives us more critical mass,” Heggestad said.

AMS' 2010 revenue totaled $542.3 million-up 4.4 percent from 2009. Following the acquisition, the combined companies' 2011 revenue is expected to total about $3 billion.

As of January 1, AMS employed 1,255. No post-acquisition layoffs or office closures are planned, Heggestad said, adding: “There's really no intent to change the makeup of either company.”

Shares of AMS stock were trading up 32 percent at $29.50 per share on Monday morning following news of the pending acquisition.