Ireland-based Mallinckrodt has entered into a definitive merger agreement to acquire US-based biopharmaceutical firm Questcor Pharmaceuticals for $5.6bn in cash and stock.
Boards of directors of both companies have unanimously approved the transaction, which is subject to customary closing conditions and scheduled to be complete in the third calendar quarter of 2014.
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Under the deal, Questcor shareholders will get $30 per share in cash and 0.897 Mallinckrodt shares for each share of Questcor common stock they own, for a total consideration of $86.10 per Questcor share.
Upon completion of the acquisition, Mallinckrodt shareholders will own 50.5% and former Questcor shareholders will own 49.5% of the combined company’s stock.
The acquisition of Questcor will give Mallinckrodt drugs that primarily treat chronic autoimmune and inflammatory disorders.
With the acquisition, Questcor’s primary product Acthar Gel, used to treat multiple sclerosis, will be added to Mallinckrodt’s growing portfolio of specialty brands, including Gablofen, PENNSAID 2%, OFIRMEV, EXALGO and XARTEMIS XR.
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By GlobalDataActhar Gel is approved by the US Food and Drug Administration (FDA) for 19 indications. It generated net sales of $761.3m for Questcor in 2013, an increase of 49.6% compared with 2012.
Most of the indications are associated with treatment of autoimmune and inflammatory conditions.
Following the transaction, Questcor commercial operations will function as a separate business unit within Mallinckrodt’s Specialty Pharmaceuticals segment.
Mallinckrodt president and chief executive officer Mark Trudeau said the company expects the deal will provide a strong and sustainable platform for future revenue and earnings growth.
"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," Trudeau said.
"With Questcor, combined with our recently completed acquisition of Cadence Pharmaceuticals, the new Mallinckrodt will have a significant, established presence with prescribers, payers and hospitals.
"We will also have an increasingly diversified specialty pharmaceuticals portfolio, which will include novel therapeutics for pain management, as well as central nervous system, renal, rheumatologic and other autoimmune and inflammatory disorders."
The combined company, to be led by Trudeau, is expected to have significantly increased scale, revenues, profitability and cash flow to provide sustainable growth built on a more diversified product platform of new therapeutics.
"Questcor’s expertise and proprietary manufacturing know-how has allowed the company to provide patients with a unique product that addresses some of the most complex and challenging therapeutic areas within specialty medicine," Trudeau added.
"Acthar is increasingly being employed by specialty physicians in the treatment of a range of serious, difficult-to-treat autoimmune and inflammatory conditions, where patients often have exhausted other good therapeutic options."
For the transaction, Barclays is serving as financial advisor for Mallinckrodt, while its legal advisors are Wachtell, Lipton, Rosen & Katz and Arthur Cox in Ireland.
Questcor’s financial advisor is Centerview Partners and its legal advisors are Latham & Watkins and Matheson in Ireland.
In addition to providing treatment for patients with serious, difficult-to-treat autoimmune and inflammatory disorders, Questcor also offers specialty contract manufacturing services to the global pharmaceutical industry via its wholly owned subsidiary, BioVectra.
