Auxilium Pharmaceuticals says it will consider Endo International’s $2.2 billion takeover bid but says it will continue with its own plans to buy Canada’s QLT and has adopted a poison pill to fend off unsolicited offers.

Auxilium received an unsolicited cash-and-stock bid from Endo of $28.10 per share and says the board and its financial and legal advisors “will carefully review all aspects of the Endo proposal”. However, the waters are muddied by the fact that Auxilium has an agreement to merge with eye specialist QLT, having offered $346 million in stock.

That deal, which would see Auxilium move its headquarters to British Columbia and enjoy lower taxes, is expected to close in the fourth quarter. Furthermore, the board says it is “not withdrawing, modifying, withholding, changing or qualifying its recommendation with respect to its existing merger agreement with QLT, or proposing to do so”. QLT’s board has also reaffirmed its support for the merger.

Auxilium, which sells Xiaflex (collagenase clostridium histolyticum) for Dupuytren's contracture, which affects the connective tissue beneath the skin in the palm of the hand, and Peyronie's disease, which causes a bothersome curvature of the penis during sex, has also adopted a poison pill, i.e. a one-year stockholder rights plan designed to protect the firm against a hostile takeover. This gives other investors the right to buy more stock at a discount if one shareholder buys 15% or more.

Many observers believe that the Endo offer is a decent one and the adoption of the poison pill will not necessarily precent a deal going through. All eyes are now on Endo to see if it will up its bid or change the terms, taking into account the QLT element.