Endo Pharmaceuticals is acquiring pelvic health specialist American Medical Systems for $2.9 billion in an effort to diversify its urology and pain treatment businesses.

Under terms of the deal, unanimously approved by both companies, Endo will acquire all of American Medical's outstanding shares for $30 per share, a total cash payment of $2.9 billion, including the assumption and repayment of $312 million of American Medical's debt.

The deal will help Endo fashion an integrated pathway for patients with pelvic troubles, such as enlarged prostate, from their initial treatment with pharmaceuticals through surgical care when necessary.

“The acquisition of AMS balances our integrated business model between branded pharmaceuticals, generics and devices and services, and better positions us to benefit from the premium that health care reform has put on providing cost-effective health solutions across the entire treatment spectrum,” said Endo's president and CEO, Dave Holveck, on a conference call about the deal.

Endo, which is based in Chadds Ford, Pennsylvania, anticipates growing revenue and earnings from an increasing number of surgical procedures performed using American Medical Systems procedures and devices, which are used to treat incontinence, erectile dysfunction, benign prostatic hyperplasia, pelvic floor prolapse, and other pelvic disorders in men and women. American Medical estimates there are as many as 350 million potential candidates for surgical treatments.

American Medical's net sales grew from $519.3 million in 2009 to $542.3 million in 2010 with men’s health contributing 45 percent of its total net sales, benign prostatic hyperplasia therapy contributing 21 percent, and women’s health contributing 33 percent.

The combined company will have about 4,000 employees, revenues of approximately $3 billion, and EBITDA of approximately $1 billion, according to Endo.

Minnetonka, Minnesota-based American Medical Systems' products were used to treat approximately 340,000 patients in 2010, according to the company.

Endo first entered the urology therapeutics area with its acquisition of Indevus Pharmaceuticals in January 2009. Since then, it has made a string of additional acquisitions. During the past 12 months, it bought HealthTronics Laboratory Solutions, a provider of urology products and services, bought out its partner Penwest Pharmaceuticals in August 2010, and snapped up the generic drugmaker Qualitest for $1.2 billion in September 2010 to expand its pain relief portfolio.

Once the American Medical deal is wrapped up, Endo may take a break from the acquisition trail, except for “small bolt-on opportunities,” says Holveck. Instead the company will focus on integrating the businesses it has just acquired.