TPG to sell Par to Endo International for $8bn

TPG garners subtantial fees and multiple realisations from ownership of Par

Endo International plc has agreed to acquire Par Pharmaceutical Holdings for $8 billion from majority shareholder TPG Capital, according to a joint announcement by both pharmaceutical companies. 

Endo, a Dublin, Ireland-based company, will acquire Par at a 10 to 11 times pro forma adjusted Ebitda purchase multiple and $6.5 billion cash consideration to the target company's shareholders as outlined in the transaction statement. Par's sale should remove any doubt about the choice of exit avenues for Fort Worth, Texas-based TPG as it concerned Par. A Woodcliff, N.J.-based generic drug development business, Par filed to go public with the Securities & Exchange Commission in March through a $100 million common share offering, according to its IPO prospectus.

Officials from TPG declined to comment on the expected return or other details of the transaction. 

Par paid its share of transaction and monitoring fees to TPG during the firm's three year ownership of the business. The pharmaceutical company paid at least $28 million in fees to the financial sponsor under a management services agreement with the private equity firm, including the $20 million transaction fee it paid to TPG three years ago when it went private for $1.9 billion. In addition, the company incurred $7.6 million in fees and expenses in fiscal year 2013 and 2014 that it paid to the financial sponsor, according to its IPO filing.  In addition, Par paid $16.8 million for services from other TPG-owned companies from fiscal year 2012 to 2014.  

TPG invested equity from its $19.8 billion TPG Partners VI fund as Private Equity International reported three years ago. The firm owns 99 percent of the pharma company's shares, according to its IPO filing.

The buyout group's sale to Endo isn't the first time, though, that TPG has realised value on its investment in Par during its ownership period. In February, the pharmaceutical manufacturer paid a $494.3 million dividend to its shareholders, its regulatory filing noted. Given that TPG owned the vast majority of its stock, it appears that the firm received the bulk of the dividend.

Par, a company left shouldering $1.9 billion of debt through the end of 2014, recorded $433.8 million in adjusted Ebitda and $1.3 billion in revenues last year through December 2014, according to SEC filings.

It operates two business segments comprised of its generic drug business within Par Pharmaceutical and its sterile products sold under Par Sterile Products.  The company had 200 products within its development pipeline at the end of last year, based on its IPO filing. 

In February 2014, Par bolstered its sterile product capabilities with its $487 million acquisition of JHP. TPG supported the deal with a $110 million equity investment and $395 million of debt from a syndicate of Wall Street banks, regulatory filings noted.

The exit by TPG also comes amid the firm's latest fundraising effort for its TPG Partners VII, the firm's latest buyout fund which is in market targeting $10 billion. An official document shows the New York State Common Retirement Fund has committed $250 million to the vehicle, while the Virginia Retirement System has pledged $300 million, PEI reported earlier this month.