Dive Brief:

• Mallinckrodt and Endo Pharmaceuticals, which have struggled through bankruptcies related to opioid litigation, said Thursday that they will merge in a cash and stock transaction that will leave a combined company valued at $6.7 billion.
• Shareholders of Mallinckrodt will end up with 50.1% of the combined company and current Mallinckrodt CEO Siggi Olafsson will take the top job at the new entity as well. Per deal terms, Endo shareholders will receive Mallinckrodt stock and a share of $80 million in cash.
• After the merger, a business made up of Endo’s sterile injectables and both companies’ generic pharmaceuticals will be separated out. The companies haven’t yet decided what that separation will look like, Olafsson told analysts and investors on a conference call. The board will “make the best decision going forward” after the combination of the businesses, he said.

Dive Insight:

After years of reeling from claims related to the opioid crisis, Mallinckrodt and Endo are now looking to the future. Mallinckrodt emerged from a second bankruptcy in November 2023 and Endo reached a settlement with the Justice Department in February 2024 to resolve its bankruptcy and investigations related to opioids.

The two companies will be stronger together by marrying “two highly complementary businesses” and leveraging cost savings of $150 million annually within three years, Mallinckrodt and Endo said. “We see multiple avenues full of growth for the branded business,” Olafsson said on Thursday’s call.

According to Olaffson, until now, both companies have been focused largely on expanding the market for their current brands. “This changes the scene completely,” Olafsson said. The merger will leave the new company will a much stronger balance sheet and the ability to go after licensing deals as well as increase investment in research and development, he said. 

Both companies have grown over the last two decades through acquisitions and together have “a strong foundation in rare and orphan diseases,” they said. Mallinckrodt and Endo expect the combined company to have pro forma revenue of $3.6 billion and adjusted EBITDA of $1.2 billion in 2025.

The new company will use Mallinckrodt’s headquarters in Dublin, Ireland, as its global home base. The U.S. headquarters and the name of the new entity will be announced later, they said. They expect the new business to trade on the New York Stock Exchange after the deal closes in the second half of 2025.