The pharmaceutical giants Mallinckrodt and Endo, both of which have faced significant business challenges, announced on Thursday their intention to merge in a substantial deal valued at $6.7 billion. This merger aims to create a powerful combined entity with enhanced scalability and operational flexibility that will enable both companies to grow and thrive in a competitive market environment.
Upon completion of this merger, Endo will operate as a wholly owned subsidiary of Mallinckrodt. The newly formed company has yet to select a name but is expected to be listed on the New York Stock Exchange. The corporate headquarters will be established in Dublin, where Mallinckrodt is currently based, while the main operational hub in the United States will be determined later. The combined entity will boast 17 manufacturing facilities, 30 distribution centers, and a workforce of approximately 5,700 employees globally.
Both Mallinckrodt and Endo specialize in the production and distribution of branded and generic pharmaceuticals. Notably, Mallinckrodt‘s product lineup includes Acthar Gel, which is approved for treating various autoimmune and inflammatory disorders. Meanwhile, Endo markets Xiaflex, a medication that has received approval for conditions such as Dupuytren’s contracture and Peyronie’s disease.
Both companies also have a portfolio of opioid medications and have faced significant litigation related to the opioid crisis, which has contributed to their financial struggles. Mallinckrodt has undergone two reorganizations under bankruptcy protection, first in 2020 and again in 2023, leading to its delisting from the New York Stock Exchange. Similarly, Endo filed for bankruptcy protection in 2022 and currently trades over-the-counter.
The merger between Mallinckrodt and Endo is anticipated to conclude in the second quarter of this year. On a pro forma basis, the newly merged company is projected to generate approximately $3.6 billion in revenue by 2025. In its inaugural year, the combined entity expects to realize about $75 million in pre-tax synergies through the integration of operations and research and development savings. Furthermore, plans are in place to streamline operations by consolidating the generic pharmaceutical divisions of both companies with Endo‘s sterile injectables business, which will eventually be spun off, pending customary approvals.
As part of the merger, Mallinckrodt‘s existing debt is expected to be refinanced, while Endo‘s debt will remain intact. The transaction will be financed using available cash resources, alongside a commitment of $900 million from Goldman Sachs to Endo. According to the merger agreement, Endo shareholders will receive $80 million in cash, subject to potential adjustments. Post-merger, Endo shareholders will possess 49.9% of the combined entity, while Mallinckrodt shareholders will hold 50.1%.
The boards of directors for both companies have unanimously approved the merger, which is still pending shareholder and regulatory approvals. Once finalized, Paul Efron, a member of Endo‘s board, will take on the role of chair for the new board. Siggi Olafsson, currently the president and CEO of Mallinckrodt, will assume the CEO position for the combined company and will also serve on its board.
“Our businesses are highly complementary, featuring a robust portfolio of durable, on-market products in our branded offerings and extensive capabilities throughout the value chain in our generics divisions,” stated Olafsson in a prepared statement. “This exciting merger will establish a larger, more diversified corporation equipped with the necessary scale and resources to fully harness the potential of both organizations. With a strong pro forma balance sheet and promising synergy opportunities, we will gain increased flexibility to invest in innovation and pursue growth avenues.”
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