Mallinckrodt to acquire Cadence Pharmaceuticalsfor $1.3 billion
A subsidiary of Mallinckrodt, a global specialty pharmaceuticals company, will acquire Cadence Pharmaceuticals, and will commence a tender offer to acquire all outstanding shares for $14 per share in cash, or approximately $1.3 billion, a 32% premium to the trailing 30-trading-day volume weighted average price of $10.62 per share.
The companies expect the transaction to close in mid- to late-March. Mallinckrodt expects the acquisition will be immediately accretive to its fiscal year 2014 adjusted diluted earnings per share, and significantly accretive to its fiscal year 2015 earnings.
Cadence Pharmaceuticals is a biopharmaceutical company focused on commercializing products principally for use in the hospital setting. The company’s product OFIRMEV (acetaminophen injection) is a proprietary intravenous formulation of acetaminophen for the management of mild to moderate pain, the management of moderate to severe pain with adjunctive opioid analgesics and the reduction of fever. OFIRMEV has experienced strong growth, and Cadence reported that it expects net revenues of $110.5 million for OFIRMEV in calendar year 2013, compared to $50.1 million in 2012. OFIRMEV currently is on formulary in more than 2,350 U.S. hospitals and has been used to treat an estimated six to seven million patients since its launch in Jan. 2011. An NDA for the product has been approved by Health Canada.
This transaction accelerates growth in Mallinckrodt’s Specialty Pharmaceuticals segment in key ways. First, the company adds another growth product, OFIRMEV, to the segment’s robust portfolio of core controlled substance generics and its growing roster of brands including EXALGO, Gablofen, PENNSAID 2% and, if approved, XARTEMIS XR, and longer term MNK-155. Additionally, with the strong presence Cadence has established in the adjacent hospital market, the acquisition adds another potential growth dimension for the segment, providing Mallinckrodt an opportunity to expand the company’s reach and penetration in this important channel.
The boards of directors of both companies have unanimously approved the transaction.