Mallinckrodt and Endo have entered into a definitive agreement to combine in a stock and cash transaction to create a global, diversified pharmaceuticals company.
Mallinckrodt and Endo plan to combine their generics businesses and Endo's sterile injectables business after the close of the transaction and intend to separate that business from the combined company at a later date, pending approval from the combined company's board of directors.
"The combined company will possess a branded business with the scale, cash flow and balance sheet strength to invest in both internal and external growth opportunities, including pursuing commercial-stage assets. Additionally, the stable and robust free cash flow generated by the combined sterile injectables and generics business should enable consistent capital returns to shareholders following its separation," said Scott Hirsch, Endo’s Interim CEO.
The combined company will have a large operating footprint, primarily located in the U.S. and supported by capabilities in Europe, India, Australia and Japan. The company will have 17 manufacturing facilities, 30 distribution centers and approximately 5,700 employees at closing.
Under the terms of the agreement, Endo shareholders will receive a total of $80 million in cash and own 49.9% of the combined company on a pro forma basis. After cash consideration, Mallinckrodt shareholders will own 50.1% of the combined company on a pro forma basis, for an implied enterprise value of $6.7 billion.
Mallinckrodt will continue as the holding company for the combined business, and Endo will become a wholly-owned subsidiary of Mallinckrodt.
Both drugmakers have dealt with their fair share of struggles related to their roles in the opioid crisis. Mallinckrodt, sunk by mounting opioid litigation costs related to its generic opioid products, filed for Chapter 11 bankruptcy in October 2020 and then again in August 2023. Endo also battled opioid lawsuits related to its painkiller, Opana ER, filing for Chapter 11 protection in August 2022.