Mallinckrodt & Endo Engage in $6.7B Merger

After almost a decade of contending with bankruptcy filings and opioid settlements, struggling pharmaceutical companies Mallinckrodt and Endo have opted to collaborate in order to establish a more adaptable entity and eventually divest their substantial generics divisions.

Mallinckrodt and Endo are merging in a cash and equity transaction valued at about $6.7 billion, the firms said on Thursday. According to the deal, Endo shareholders are set to get $80 million in cash and will own 49.9% of the merged entity, whilst Mallinckrodt shareholders will retain 50.1% of the combined business.

Mallinckrodt will serve as the holding firm for the new enterprise, with Endo becoming a subsidiary of the Irish pharmaceutical giant, as stated in a news statement.

The deal, which is anticipated to conclude in the latter half of 2025, will result in Mallinckrodt and Endo consolidating their portfolios of branded products, including Mallinckrodt’s kidney disease medication Terlivaz and Endo’s testosterone shot Aveed. This merger will also provide the newly formed entity with the financial latitude to engage in short-term business development and long-term creativity, according to Mallinckrodt and Endo.

The pharmaceutical companies anticipate that the merged entity would provide $3.6 billion in sales and $1.2 billion in earnings in 2025. The newly formed entity, headquartered in Mallinckrodt’s Dublin facility post-completion, will manage 17 manufacturing plants and 30 distribution centers across the U.S., India, Japan, Europe and Australia, employing approximately 5,700 individuals, as stated in the companies’ announcement.

“The combination of Mallinckrodt and Endo brings together two essential pharmaceutical organizations to accelerate value creation for our shareholders, customers, employees, the patients we serve and our other stakeholders,” said Mallinckrodt’s CEO, Siggi Olafsson.

He added that this promising merger would result in a greater, more diversified organization with the necessary scale and assets to maximize the potential of both companies.

Upon the completion of the merger, Olafsson will assume the role of CEO of the merged firm, while Paul Efron, an incumbent of Endo’s BODs, will function as head of the board for the newly formed entity.

Further executive appointments, the site of the merged company’s U.S. headquarters, and its new name will be disclosed in the near future, the companies remarked.

Mallinckrodt and Endo want to merge their branded operations and then integrate their sterile injectables and generic drugs divisions before divesting them into an independent entity. The decision on the spinoff will ultimately rest with the board of directors of the merged firm, according to Mallinckrodt and Endo.

Due to challenging market circumstances and ongoing opioid lawsuits, both firms have faced significant difficulties in recent years.

Noting substantial legal and financial concerns, Mallinckrodt initially filed for bankruptcy in October 2020. Concurrently, the business disclosed an opioid settlement of $1.6 billion, to be paid to trusts in many payments over a number of years, and it also agreed to comply with an operational restriction over its marketing of opioids.

Endo’s bankruptcy filing in August 2022 was prompted, in part, by litigation alleging that the company’s improper marketing of the painkiller Opana ER, which had been taken off the market in 2017, contributed to the opioid epidemic.