April 7, 2014
(NYSE: MNK), a leading global specialty pharmaceuticals company, and Questcor Pharmaceuticals, Inc. (NASDAQ: QCOR), a high-growth biopharmaceutical company, today announced that they have entered into a definitive merger agreement under which
will acquire Questcor in a transaction valued at approximately
. 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.
Under the terms of the transaction, Questcor shareholders will receive
per share in cash and 0.897
shares for each share of Questcor common stock they own, for a total approximate consideration of
per Questcor share. Following completion of the merger,
shareholders will own approximately 50.5% and former Questcor shareholders will own approximately 49.5% of the combined company's stock. Based on the closing price of
and Questcor on
April 4, 2014
, the total per share consideration represents a premium of approximately 27% per share over Questcor's stock price, and a premium of approximately 33% over Questcor's trailing 20-trading-day volume-weighted average price.
Highlights of Transaction
Mark Trudeau, President and Chief Executive Officer of Mallinckrodt
- With transaction, Mallinckrodt is expected to be an increasingly diversified, high-growth specialty pharmaceuticals company with significantly increased scale, revenues, profitability and cash flow, creating a strong platform to deliver sustainable growth and substantial value for shareholders of both companies.
- Transaction expected to be immediately accretive to Mallinckrodt's fiscal year 2014 adjusted diluted earnings per share; expected to be significantly accretive in fiscal year 2015.
- With strong cash generation, Mallinckrodt is expected to be well positioned to decrease the combined company's leverage over time.
- Questcor's high-growth H.P. Acthar ® Gel is expected to be a strong complement to Mallinckrodt's broadening growth portfolio of leading specialty pharmaceutical brands, including OFIRMEV ®, EXALGO ® and XARTEMIS ™ XR. Acthar generated net sales for Questcor of $761.3 million in calendar 2013, up 49.6% from calendar 2012.
- Acthar is approved by the U.S. Food and Drug Administration (FDA) for 19 indications, many of which are associated with the treatment of autoimmune and inflammatory conditions.
- Questcor commercial operations will function as a separate business unit within Mallinckrodt's Specialty Pharmaceuticals segment.
, said, "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
and Questcor. 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. With Questcor, combined with our recently completed acquisition of Cadence Pharmaceuticals, the new
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."
"After significant due diligence, we have concluded that Questcor is another ideal strategic fit with
," Trudeau continued. "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. 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. With the exceptional talent and expertise Questcor brings, combined with the financial strength, portfolio breadth and geographic reach of the combined company, we believe we are now well on our way to becoming a leader in the development and commercialization of specialty therapeutics around the world."
Don M. Bailey, President and Chief Executive Officer of Questcor
, said, "This transaction will create substantial value for our shareholders, employees, customers and patients. The cash and equity structure of the merger will allow our shareholders to realize significant and immediate value, and with approximately 49.5% ownership of the combined company our shareholders will also be able to participate in the growth and value creation that we believe the combined company is poised to deliver."
has significant experience and expertise in managing medicines in highly regulated, complex markets," Bailey continued. "I strongly believe
is the right partner to support the continued growth of Acthar in the highly specialized markets that we serve. The increased cash flow and scale of operations of a combined Questcor/
organization will provide an even stronger platform to support the expansion of Acthar into new therapeutic areas. Questcor commercial operations will function as a separate business unit within
, and given the complementary nature of our businesses and product portfolios we expect this to be a seamless transaction. We look forward to becoming an important part of this exciting new company."
Financially Compelling Transaction
expects the transaction to be immediately accretive to its fiscal year 2014 adjusted diluted earnings per share, and significantly accretive to its fiscal year 2015 adjusted diluted earnings per share.
intends to provide investors with guidance for the combined company at a future point following the completion of the transaction.
The combined company's earnings profile will be enhanced from sustainable cost and tax synergies beginning in fiscal year 2014. The tax synergies derive from
Irish domicile and the future capital structure of the combined company.
expects to use the strong free cash flow generated by the new entity to reduce outstanding debt and
net debt-to-EBITDA leverage ratio in fiscal year 2014, and to achieve further reductions over the course of fiscal year 2015.
stated strategy to become a top quartile Specialty Pharmaceutical company, Mallinckrodt expects that approximately 70% of the pro forma fiscal year 2014 revenues of the combined company will come from branded and specialty generic pharmaceutical products as well as active pharmaceutical ingredients, which also leverage
core competency managing controlled substances.
Adds to Mallinckrodt's Growing Brands Portfolio
Questcor's primary product, Acthar, will add significant breadth and depth to
growing portfolio of specialty brands, which includes EXALGO, Gablofen
, recently launched PENNSAID
2% and XARTEMIS XR, and just acquired OFIRMEV, an IV form of acetaminophen on formulary in more than 2,350 hospitals across the U.S.
H.P. Acthar Gel (repository corticotropin injection) is an injectable drug approved by the 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.