By Sriparna Roy
(Reuters) - Mallinckrodt and Endo, drugmakers with a shared history of bankruptcy and U.S. opioid litigation, will merge in a deal valued at nearly $7 billion to boost scale for selling their branded drugs.
Endo shareholders will get $80 million in cash and own 49.9% of the combined company, while Mallinckrodt shareholders will own the rest for an enterprise value of $6.7 billion, the companies said on Thursday.
The new company, expected to generate $3.6 billion in 2025 revenue, will combine their branded drugs businesses that include Endo's testosterone injection Aveed as well as Mallinckrodt's Acthar Gel and kidney disease therapy Terlivaz.
The merger will "create a larger and more diversified entity with the scale and resources needed to unlock the full potential of both companies", said Mallinckrodt CEO Siggi Olafsson, who will take over the top role at the combined company after the deal's expected close in the second half of 2025.
Both the companies also sell generic treatments, including highly-regulated drugs such as opioids.
"The beauty of this transaction is this specialty brand company will cover so many therapeutic areas ... and we could even go into a new one, so it's an open opportunity for us," said Olafsson on a conference call.
The two firms plan to combine their generic drug businesses and Endo's sterile injectables unit into another company that will be separated after the closing of the deal.
The pure-play branded business will have the opportunity to pursue strategic business development and external growth opportunities, Endo's interim CEO Scott Hirsch said on the call.
Dublin-based Mallinckrodt went bankrupt twice - once in 2020 due to its high debt load and litigation over allegedly deceptive marketing of highly addictive generic opioids; and again in 2023 due to declining sales of its key branded drugs, including Acthar Gel.
As part of its second restructuring, Mallinckrodt was able to trim $1 billion from its previously agreed upon opioid settlement that resolved about 3,000 lawsuits.
Endo filed for bankruptcy in 2022 and completed its financial restructuring last year.
The combined company will benefit from Mallinckrodt and Endo's "deep expertise in complex, highly regulated products, as well as a strong compliance culture", they said in a statement on Thursday.
Endo will become a wholly-owned unit of Mallinckrodt and the new company will be listed on the New York Stock Exchange.
Lazard served as Mallinckrodt's financial adviser, while Goldman Sachs & Co. LLC served as Endo's financial adviser.
(Reporting by Sneha S K and Sriparna Roy in Bengaluru; Editing by Devika Syamnath)