I've done zero work on Questcor, but over the past few years I've talked to a few very serious short-sellers who have.
When I saw the news this morning, the first thing that crossed my mind: Mattel (MAT) buying The Learning Company....Hewlett Packard (HPQ) buying Autonomy...Medtronic (MDT) buying Arterial Vascular Engineering.
All three of the targets were the focus of short-sellers, and all three famously blew up, or otherwise caused havoc, once inside the new parent -- for the very reason the short-sellers had been short. Mattel was perhaps the most wounded, and almost taken down by what it found once it owned The Learning Company.
No idea if that will happen here, but a quick peek at Mallinckrodt's history sure is a twisted tale: Started in St. Louis as a chemical company, ultimately sold to Avon (AVP), then Tyco (TYC), then spun off. Now a specialty drug rollup based in Ireland.
Oh, and this small disclosure from Questcor's 10-K:
"We are involved in an ongoing government investigation by the United States Department of Justice involving our promotional practices and related matters, the results of which may have a material adverse effect on our sales, financial condition and results of operations.