Irish drugmaker Mallinckrodt to buy Questcor Pharmaceuticals for $5.6 bn

Irish specialty pharmaceutical company Mallinckrodt Plc yesterday struck a deal to buy US drugmaker Questcor Pharmaceuticals Inc for $5.6 billion to acquire its multiple sclerosis drug Acthar Gel, in a bid to expand its own portfolio.

With this acquisition Mallinckrodt is expected to become an increasingly diversified, high-growth specialty pharmaceuticals company with significantly increased scale, revenues, profitability and cash flow, creating a strong platform to deliver sustainable growth and substantial value for shareholders of both companies.

The deal comes less than two months after Mallinckrodt bought Cadence Pharmaceuticals Inc for $1.3 billion.  (See: Mallinckrodt to acquire biopharmaceutical firm Cadence Pharmaceuticals for $1.3 bn)

Under the deal agreed to by the boards of both companies, Mallinckrodt will pay $30 in cash and 0.897 of its shares for each Questcor share, for a total value of about $86.10, a 27 per cent premium to Questcor's Friday close.

Mallinckrodt expects the transaction expected to be immediately accretive to it's fiscal year 2014 adjusted diluted earnings per share; and to be "significantly accretive in fiscal year 2015".

Post closing, Mallinckrodt's shareholders will own 50.5 per cent of the combined company, with Questcor shareholders owning the rest.

Mallinckrodt International Finance SA, earler a part of the &10-billion healthcare provider Covidien, has entered into debt financing commitments with Barclays that, together with cash on hand, are sufficient to provide the funds necessary to consummate the transaction. Mallinckrodt expects that the financing for the transaction will consist of a combination of a senior secured term loan facility and senior notes.

Mallinckrodt International Finance, had become a wholly-owned subsidiary of Mallinckrodt plc at the time of the completion of the separation of the pharmaceuticals business of Covidien from its other businesses, in April 2013.

''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,'' said Mark Trudeau, president and CEO of the Mallinckrodt. ''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.''

California-based Questcor is a biopharmaceutical company focused on the treatment of patients with serious, difficult-to-treat autoimmune and inflammatory disorders.

It also provides specialty contract manufacturing services to the global pharmaceutical industry through its wholly-owned subsidiary, BioVectra Inc.

Questcor's main product is the injectable drug Acthar Gel, which it acquired in 2001 from Aventis. Acthar Gel has been approved by the US Food and Drug Administration for 19 conditions, including multiple sclerosis and infantile spasms.

Acthar Gel generated annual sales of about $760 million in 2013, which is nearly all of Questcor's revenue of $798.9 million.

Questcor was founded in 1990 and has a market cap of $4.9 billion.

Mallinckrodt is a global specialty pharmaceutical and medical imaging business that develops, manufactures, markets and distributes specialty pharmaceutical products and medical imaging agents.

The company's Specialty Pharmaceuticals segment includes branded and specialty generic drugs and active pharmaceutical ingredients, and the Global Medical Imaging segment include contrast media and nuclear imaging agents.

Mallinckrodt has around 5,500 employees worldwide and a commercial presence in around 70 countries. The company's had revenues of $2.2 billion in 2013.