The New York Times, Chad Bray, April 7, 2014
Mark Trudeau, the chief executive of Mallinckrodt, with an employee at the unveiling of a corporate logo in St. Louis last year. (Whitney Curtis/Associated Press Images for Mallinckrodt) |
The
transaction is expected to expand Mallinckrodt’s offerings of specialty
pharmaceuticals, namely Questcor’s primary drug Acthar, which is used to manage
difficult-to-treat autoimmune and inflammatory conditions.
Under the
terms of the deal, Questcor stockholders will receive $30 a share in cash and
0.897 of a Mallinckrodt share, or a total of $86.08 a share as of Friday’s
closing price. The deal represents a premium of 33 percent over Questcor’s
trailing 20-trading-day volume-weighted average price, Mallinckrodt said.
After the
transaction, Mallinckrodt’s shareholders will own 50.5 percent of the combined
company, while Questcor shareholders will own the rest.
“We believe
this transaction will provide a strong and sustainable platform for future
revenue and earnings growth, and provide exceptional value for shareholders of
both Mallinckrodt and Questcor,” Mark C. Trudeau, the Mallinckrodt president
and chief executive, said in a statement. “It will substantially increase the
scale, diversification, cash flow and profitability of our business, while
expanding and enhancing the breadth and depth of our specialty pharmaceutical
platform.”
The
transaction has been unanimously approved by the boards of directors of both
companies and is expected to be completed in the third quarter of 2014. The
deal is subject to shareholder and regulatory approval.
Mallinckrodt
intends to use new debt and cash on hand to finance the deal.
After the
closing, the combined company will be led by Mr. Trudeau, and three directors
will be added to its board from Questcor, including Don M. Bailey, Questcor’s
chief executive.
Questcor
will function as a separate business unit within Mallinckrodt, which will
continue to be based in Dublin.
“This
transaction will create substantial value for our shareholders, employees,
customers and patients,” Mr. Bailey said in a statement.
Acthar,
Questcor’s primary product, is expected to complement Mallinckrodt’s portfolio
of specialty pharmaceutical brands. Acthar, responsible for substantially all
of Questcor’s revenue, generated net sales of $761.3 million in 2013, up 49.6
percent from the previous year.
For the
full year, Questcor posted adjusted profit of $337 million, a 61 percent
increase from 2012.
Questcor
also acquired the rights from Novartis last June to develop and commercialize
in the United States the drug Synacthen, which is used to treat inflamed bowels
and colons.
Mallinckrodt
posted revenue of $2.2 billion in 2013. It employs 5,500 people in about 70
countries.
This is the
second major acquisition by Mallinckrodt in the United States this year.
In
February, the company agreed to buy Cadence Pharmaceuticals, a San Diego
biopharmaceutical company, for about $1.3 billion in cash.
Mallinckrodt
was advised by Barclays and the law firms Arthur Cox and Wachtell, Lipton,
Rosen & Katz. Questcor received financial advice from Centerview Partners
and legal advice from Matheson and Latham & Watkins.
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