This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Mallinckrodt Is Just One Of Dennis Kozlowski's Billion Dollar Babies

NEW YORK (TheStreet) -- On the surface the story seemed simple.

Mallinckrodt Pharmaceuticals of Ireland (MNK - Get Report) buys Cadence Pharmaceuticals (CADX) of San Diego for $1.3 billion, mainly to get control of an injectable form of acetaminophen, the main ingredient in Tylenol.

But what started for me as a story about pain relief turned into something else, a lesson in why investors should always pay attention and not give up on a company just because something bad happens which has nothing to do with the underlying business.

Because Mallinckrodt isn't really Irish. The name's German, and the company is Missourian. And this story starts with Dennis Kozlowski, the former Tyco (TYC) CEO who emerged last month after eight years behind bars.

Mallinckrodt, it turns out, is one of Kozlowski's many billion dollar babies. Tyco acquired the company, which is actually based in a suburb of St. Louis, in 2001, when Kozlowski was CEO.

The original Mallinckrodt was a chemical company formed by three brothers, the first to introduce barium sulfate as a contrast medium for x-rays, 100 years ago. The name lives in Boston on a research center backed by one of the founder's descendants, Edward Jr.

Kozlowski built Tyco from a small into a very large conglomerate during the 1990s. At its height, sometime after the Mallinckrodt buy, the company had a book value of more than $110 billion. Its actual value, due to publicity surrounding its CEO, was less than that but Tobias Lefkovitz, now with Citigroup, was, even then, in late 2001, pounding the table for the stock.

Maybe you should have listened to him.

Kozlowski's fall eventually left the company in the hands of CEO Edward Breen, now 57, and it is his breakup of the company that eventually led to today's story. It was Breen who split Tyco in three, in 2007, creating (among other things) Covidien (COV) out of the former Tyco Healthcare.

Covidien is presently worth $31.5 billion. The new Mallinckrodt was Covidien's drug unit before being spun out last year.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
MNK $127.85 -1.80%
AAPL $125.30 -0.85%
FB $82.86 -0.40%
GOOG $552.93 0.16%
TSLA $190.75 0.09%


DOW 17,886.46 -89.85 -0.50%
S&P 500 2,077.06 -9.18 -0.44%
NASDAQ 4,923.7950 -23.6460 -0.48%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs