ANAHEIM, Calif. (AP) — Mallinckrodt is buying
California-based Questcor Pharmaceuticals Inc. for a combination of
stock and cash valued at about $5.6 billion that will help to further
diversify the Irish company’s business.
Mallinckrodt makes a range
of specialty pharmaceuticals. Questcor’s primary product is H.P. Acthar
Gel, which is used in the management of autoimmune and inflammatory
conditions. It is approved in the U.S. for treating 19 indications.
"The
increased cash flow and scale of operations of a combined
Questcor/Mallinckrodt organization will provide an even stronger
platform to support the expansion of Acthar into new therapeutic areas,"
Questcor President and CEO Don Bailey said in a statement.
Questcor
stockholders will receive $30.00 per share in cash and 0.897
Mallinckrodt shares for each Questcor share they own, for a total
consideration of approximately $86.10 per Questcor share. Questcor is
based in Anaheim, Calif.
That offer represents a 27 percent
increase over Questcor’s closing price on Friday. Questcor shares
climbed $11.63, or 17.1 percent, to $79.50 in morning trading on Monday.
After
the deal closes, Mallinckrodt PLC shareholders will own about 50.5
percent and former Questcor shareholders will own about 49.5 percent of
the combined company’s stock. Both companies’ boards unanimously
approved the transaction. It still needs approval of both companies’
shareholders.
The combined company will be headed by Mallinckrodt
President and CEO Mark Trudeau. Mallinckrodt’s board will expand by
three members to 12 directors. The three new members will include Bailey
and two of Questcor’s current, independent directors, Angus Russell and
Virgil Thompson. Mallinckrodt Chairman Melvin Booth will remain in that
position.
Once the transaction is complete, Questcor’s commercial
operations will function as a separate unit within Mallinckrodt’s
specialty pharmaceuticals segment and report directly to Trudeau.
Mallinckrodt anticipates adding Questcor executives to its leadership
team, with the appointments expected to be announced at a later date.
Mallinckrodt will continue to be domiciled in Ireland. Its principal executive office will remain in
Dublin.
The
deal is expected to immediately add to Mallinckrodt’s fiscal 2014
adjusted earnings per share and significantly add to fiscal 2015
adjusted earnings per share.
The transaction is targeted to close
in the third quarter. Mallinckrodt shares fell $2, or 3.2 percent, to
$60.51 in morning trading.
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