LONDON - The Irish specialty drug maker Mallinckrodt said on Monday that it would acquire Questcor Pharmaceuticals of California in a cash and stock deal valued at $5.6 billion.
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.â€
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.
