Endo Health Solutions, a medical products manufacturer based in Chadds Ford, Pennsylvania, has experienced the ire of investors following the acquisition of American medical Systems for $2.9 billion. This high-value acquisition did not pay off for the company. According to analysts, Endo Health Solutions may benefit by selling its assets to Covidien.
In an article by Bloomberg, analysts explored the benefits of selling its assets to Covidien. Covidien has the financial capacity and infrastructure to commercialize the urology devices that Endo Health Solutions purchased from AMS. Since Covidien plans to sell off its Mallinckrodt business later in 2013, Endo’s range of pain treatment products and generics could be a valuable way to boost share price.
Some analysts, however, believe that Endo will sell itself to other companies in parts. For example, Teva pharmaceuticals could be a potential buyer for Endo’s generic medications. As of now, no one from Teva, Covidien or Endo Health Solutions is commenting on potential sales or purchases.
Kevin Kedra is an analyst at New York-based Gabelli. In a phone interview with Bloomberg, he said, “Endo needs to have some sort of value-creating event, and splitting up seems like the best path.” He continued, “Individual pieces of the business would be attractive to buyers. It was the right intention to diversify the business, but the execution wasn’t there.”