Mallinckrodt plc (“Mallinckrodt“) and Endo, Inc. (OTCQX: NDOI) (“Endo”) today announced that they have entered into a definitive agreement to combine in a stock and cash transaction to create a global, scaled, diversified pharmaceuticals leader.
“The combination of Mallinckrodt and Endo brings together two essential pharmaceuticals organizations to accelerate value creation for our shareholders, customers, employees, the patients we serve and our other stakeholders,” said Siggi Olafsson, President and Chief Executive Officer of Mallinckrodt. “Our businesses are highly complementary, with durable, on-market products in our branded portfolios and extensive capabilities across the value chain in our generics businesses. This exciting combination will create a larger and more diversified entity with the scale and resources needed to unlock the full potential of both companies. Additionally, with a strong pro forma balance sheet and compelling synergy opportunities, we will have greater flexibility to invest in innovation and pursue growth opportunities. Endo and Mallinckrodt both have talented teams that put patients first, and I look forward to bringing our organizations together to achieve even greater success.”
Mallinckrodt and Endo plan to combine their generic pharmaceuticals 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. Such a separation would be subject to approval by the combined company’s Board of Directors and other conditions.
“We believe this combination with Mallinckrodt, along with the subsequent separation of the combined sterile injectables and generics business, presents a unique opportunity to deliver significant shareholder value,” said Scott Hirsch, Interim CEO of Endo. “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.”
Strategic and Financial Rationale
This combination brings together two highly complementary and synergistic companies to deliver significant strategic and financial benefits:
- Scaled and diversified branded pharmaceuticals portfolio: The combined company’s brands portfolio will comprise leading pharmaceutical brands across a range of therapeutic areas, including XIAFLEX® (collagenase clostridium histolyticum), Acthar® Gel (repository corticotropin injection), Terlivaz® (terlipressin), SUPPRELIN® LA (histrelin acetate) and AVEED® (testosterone undecanoate). With this enhanced commercial portfolio, and a strong foundation in rare and orphan diseases, the combined brands business will be poised to deliver strong growth with an attractive cash flow profile.
- Enhanced financial flexibility to pursue growth opportunities: The combined company will have a strong balance sheet with net leverage of approximately 2.3x1 expected at close, ample financial flexibility and additional leverage capacity. This will enable the combined company’s strategic focus, including building on its branded platform through near-term business development and long-term innovation, extending its leadership in existing therapeutic areas, and potentially adding capabilities in other strategic therapeutic areas.
- Scaled sterile injectables and generics pharmaceuticals business: The combined company’s sterile injectables and generics business will have a complementary product portfolio across multiple delivery technologies, formulations and dosage forms, as well as a leading controlled substances franchise. It will benefit from robust commercial and manufacturing infrastructure, extensive supply chain capabilities and deep expertise in complex, highly regulated products, as well as a strong compliance culture. This business is expected to generate significant free cash flow both immediately and over the long term.
- Strong financial profile and compelling synergy opportunities: The combined company is expected to generate pro forma 2025 revenue of $3.6 billion and pro forma 2025 Adjusted EBITDA of $1.2 billion.2 The combined company is expected to generate at least $150 million of annual pre-tax run-rate operating synergies by Year 3, and approximately $75 million of pre-tax synergies in Year 1, driven by business function integration and R&D savings from economies of scale, among other areas.
- Heavily U.S.-Focused Footprint: The combined company will have a robust operating footprint, primarily located in the United States and supported by capabilities in Europe, India, Australia and Japan. The combined company will have 17 manufacturing facilities, 30 distribution centers and approximately 5,700 employees at closing.
- Experienced teams with specialized expertise: Mallinckrodt and Endo’s teams both possess highly specialized expertise and proven track records of high quality, reliability and compliance across their respective businesses. This includes deep clinical and regulatory expertise to drive approvals of complex drugs and devices, together with experience commercializing complex, highly regulated products.
Leadership and Headquarters
Upon completion of the transaction, Mr. Olafsson will become President, CEO and a member of the Board of Directors of the combined company, and Paul Efron, a member of the Endo Board of Directors, will serve as Board Chair. The combined company’s Board is expected to have a total of nine directors at close, including three additional directors from Mallinckrodt, three additional directors from Endo and one new director.
Additional leadership team appointments and the names of all directors will be announced prior to or in conjunction with the closing of the transaction.
Mallinckrodt’s headquarters in Dublin, Ireland, will serve as the combined company’s global headquarters following the close. The location of the combined company’s U.S. headquarters, as well as the corporate name, will be announced in due course.
Transaction Details
Under the terms of the agreement, Endo shareholders will receive a total of $80 million in cash (subject to possible adjustment) and Endo shareholders will 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 pro forma enterprise value of $6.7 billion.3
Mallinckrodt will continue as the holding company for the combined business, and Endo will become a wholly-owned subsidiary of Mallinckrodt. Mallinckrodt’s existing senior secured term loans and senior secured notes are expected to be refinanced in connection with the transaction, while Endo’s debt is expected to remain outstanding. Mallinckrodt and Endo will finance the transaction, including the contemplated refinancing, with cash on hand and $900 million of committed financing provided to Endo by Goldman Sachs & Co. LLC.
The transaction, which has been approved by the Boards of Directors of both companies, is expected to close in the second half of 2025, subject to approval by shareholders of both companies, regulatory approvals and customary closing conditions.
The combined company is expected to be listed on the New York Stock Exchange (NYSE), subject to approval of the combined company’s Board of Directors.
Conference Call and Webcast
Mallinckrodt and Endo will host a joint conference call today, March 13, at 8:00 a.m. Eastern Time to discuss the proposed transaction and their respective fourth quarter and full year 2024 financial results.
The webcast may be accessed through this webcast link or from the Investor Relations section of either company’s website at https://ir.mallinckrodt.com/ and https://investor.endo.com/. To access the call through a conference line, participants may dial 800-836-8184 (U.S. and Canada toll-free) or 646-357-8785 (outside the U.S.). Participants are advised to join 10 minutes prior to the scheduled start time. A replay of the webcast will be available following the event.
An investor presentation, which will be referenced during the webcast, is also available from the Investor Relations section of both companies’ websites.
In separate press releases today, Mallinckrodt and Endo each reported financial results for fourth quarter and fiscal year 2024. The press releases are available in the Investor Relations sections of the companies’ respective websites, and Mallinckrodt has additionally posted its quarterly remarks.
As a result of the transaction announcement, Mallinckrodt and Endo will host the joint transaction call in lieu of their previously scheduled fourth quarter and fiscal year earnings calls, each of which were also scheduled to be held at 8:00 a.m. Eastern Time this morning.
Advisors
Lazard is serving as Mallinckrodt’s financial advisor; Wachtell, Lipton, Rosen & Katz is serving as lead counsel; and Hogan Lovells and Arthur Cox are also serving as legal counsel to Mallinckrodt. Goldman Sachs & Co. LLC is serving as Endo’s financial advisor; Davis Polk & Wardwell LLP is serving as lead counsel; and Paul, Weiss, Rifkind, Wharton & Garrison LLP and A&L Goodbody LLP are also serving as legal counsel to Endo.
