Endo International plc – Ordinary Shares (NASDAQ:ENDP) announced it has entered into a definitive agreement to sell Mexico City based Grupo Farmacéutico SOMAR to Advent International for approximately $124 million subject to customary adjustments for cash, debt and working capital.
“Earlier this year, we disclosed our intention to divest non-core assets, including SOMAR, in order to re-direct our resources to our core areas of growth. Today, we are pleased to announce our agreement with Advent to divest SOMAR,” said Paul Campanelli, President and CEO of Endo. “SOMAR has a talented team and I want to thank them for the contributions they have made to our Company.”
“SOMAR is a leading player in the large, growing Mexican private generics market,” said Juan Pablo Zucchini, a Managing Partner and Head of the Latin American Healthcare practice at Advent International. “This investment aligns well with our healthcare sector focus in the region.” Enrique Pani, a Managing Director in Advent’s Mexico City office, added, “We look forward to working with SOMAR’s talented management team to continue growing all of the company’s business lines.”
The transaction is expected to close in the second half of 2017, subject to customary conditions, including the approval of the Mexican Competition Commission. Endo intends to classify the SOMAR assets and liabilities as held-for-sale in second-quarter 2017 and consequently expects to record an estimated pre-tax impairment charge of approximately $100 million, primarily impacting the carrying balances of goodwill and other intangible assets. Endo will finalize its analysis and record any required impairment charges in connection with its second-quarter 2017 financial reporting close.
Shares of Endo are currently trading at $11.23, down $0.24 on -2%. ENDP has a 1-year high of $24.93 and a 1-year low of $9.70. The stock’s 50-day moving average is $12.02 and its 200-day moving average is $12.33.
On the ratings front, Endo has been the subject of a number of recent research reports. In a report issued on June 23, BMO analyst Gary Nachman reiterated a Hold rating on ENDP, with a price target of $16, which implies an upside of 39% from current levels. On June 16, Cantor’s Louise Chen initiated coverage with a Hold rating on the stock and has a price target of $12.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Gary Nachman and Louise Chen have a yearly average return of 11.6% and a loss of -12.1% respectively. Nachman has a success rate of 64% and is ranked #620 out of 4592 analysts, while Chen has a success rate of 39% and is ranked #4501.
Overall, 7 research analysts have assigned a Hold rating and 2 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $15 which is 30.8% above where the stock closed on Monday.
Endo International Plc operates as a pharmaceutical company. It focuses on developing, manufacturing, and distributing of branded and generic pharmaceutical products. The company operates through the following segments: U.S. Branded Pharmaceuticals, U.S. Generic pharmaceuticals and International Pharmaceuticals. The U.S. Branded Pharmaceuticals offers products that focus on the treatment and management of conditions in urology, urologic oncology, endocrinology, and orthopedics. The U.S. Generic pharmaceuticals segment consist of a differentiated product portfolio including high-barrier-to-entry products, first-to-file or first-to-market opportunities that are difficult to formulate, difficult to manufacture or face complex legal and regulatory challenges. The International Pharmaceuticals segment includes a variety of pharmaceutical products for the Canadian, Latin American, South African, and world markets.