Mallinckrodt to Acquire Questcor Pharmaceuticals for $5.6 Billion

The specialty pharmaceutical company Mallinckrodt plc and the biopharmaceutical Questcor Pharmaceuticals have entered into a definitive merger agreement under which Mallinckrodt will acquire Questcor in a transaction valued at approximately $5.6 billion. The transaction was unanimously approved by the boards of directors of both companies. Subject to customary closing conditions, the transaction is currently expected to be completed in the third calendar quarter of 2014. Upon closing, Questcor commercial operations will function as a separate business unit within Mallinckrodt’s Specialty Pharmaceuticals segment.

Under the terms of the transaction, Questcor shareholders will receive $30.00 per share in cash and 0.897 Mallinckrodt shares for each share of Questcor common stock they own, for a total approximate consideration of $86.10 per Questcor share. Following completion of the merger, Mallinckrodt shareholders will own approximately 50.5% and former Questcor shareholders will own approximately 49.5% of the combined company’s stock.

A key product is Questcor’s H.P. Acthar® Gel (repository corticotropin injection), which generated 2013 sales of $761.3 million. H.P. Acthar® Gel is an adrenocorticotropic hormone analogue and injectable drug approved by FDA for 19 indications. Increasingly used in the management of difficult-to-treat autoimmune and inflammatory conditions, Acthar comprises substantially all of Questcor’s net sales and is primarily prescribed for the treatment of multiple sclerosis relapses in adults, proteinuria associated with nephrotic syndrome, certain rheumatology-related conditions and infantile spasms. Questcor also provides specialty contract manufacturing services to the global pharmaceutical industry through its wholly-owned subsidiary BioVectra Inc. Additionally, in June of 2013, Questcor acquired rights from Novartis Pharma AG and Novartis AG to develop and commercialize Synacthen and Synacthen Depot in the US and certain countries outside the US. Questcor is currently in the early stages of evaluating Synacthen in several potential indications being considered for possible US clinical development.The drug is used to treat certain autoimmune and inflammatory conditions. Questcor reported 2013 sales of $799 million and adjusted net income of $337 million.

The combined company will be led by Mark Trudeau, president and CEO Mallinckrodt. It is expected that, following closing of the transaction, Mallinckrodt’s board of directors will be increased to twelve members, with the addition of three directors from Questcor. The three directors will include Don Bailey, president and CEO of Questcor, and two current, independent directors of Questcor: Angus C. Russell and Virgil D.Thompson. Melvin D. Booth, the current chairman of Mallinckrodt’s board of directors, will continue in that role after the transaction is completed.

Upon closing, Mallinckrodt’s Specialty Pharmaceuticals segment reporting directly to Trudeau. Mallinckrodt expects to add Questcor executives to Mallinckrodt’s leadership team; these individual appointments will be announced at a later date. Mallinckrodt will continue to be domiciled in Ireland with its principal executive office in Dublin.

Source: Mallinkckrodt

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