Rumour confirmed as Mallinckrodt merges with Endo

Two companies forced to file for bankruptcy protection due to opioid litigation in the US – Mallinckrodt and Endo – have agreed to join forces via a $6.7 billion merger.

According to the announcement, Endo shareholders will end up holding 49.9% of the combined company and receive a cash payment of around $80 million, with Mallinckrodt investors holding the remaining 50.1%.

The new entity is expected to be listed on the New York Stock Exchange and will generate around $3.6 billion in revenue this year, according to a joint statement, which says the deal will create "a larger and more diversified entity with the scale and resources needed to unlock the full potential of both companies."

If the deal goes through, Mallinckrodt chief executive Siggi Olafsson will become president and CEO of the combined company, while Endo director Paul Efron will serve as chairman of the board. The Endo name will be retained as a wholly-owned subsidiary of Mallinckrodt.

Mallinckrodt and Endo were both involved in the sale of opioid painkillers and faced litigation claiming that they played a role in driving the opioid crisis, which has claimed the lives of hundreds of thousands of people through overdose.

The two companies filed for bankruptcy protection as part of settlement agreements for that litigation, parting with billions of dollars to put the lawsuits behind them and support programmes to support people whose lives have been affected by opioid use.

Since then, they have been re-inventing themselves as specialty pharma companies with a new, diversified business scope, and both have recently divested businesses as part of that refocus.

Philadelphia-based Endo sold its international pharma unit to Knight Therapeutics this week for up to $99 million, while Ireland-headquartered Mallinckrodt sold Therakos, a specialist in extracorporeal photopheresis (ECP) delivery systems for autologous immunomodulatory therapy, to private equity firm CVC in December for $925 million.

Mallinckrodt is now focused on generics and branded specialty medicines such as Acthar Gel (repository corticotropin injection) for multiple chronic inflammatory or autoimmune conditions and Terlivaz (terlipressin) for hepatorenal syndrome (HRS), making revenues of $1.5 billion in the first nine months of 2024 and a net loss of $135 million.

Meanwhile, Endo sells a range of generics, branded medicines, and sterile injectables, including Xiaflex (collagenase clostridium histolyticum) for Dupuytren's contracture and Peyronie's disease, and is predicting its 2024 revenues will reach upwards of $1.7 billion, with an anticipated operating loss of up to $655 million.

As a consequence of the merger, the generics units of both companies and Endo's sterile injectables business will be combined into a standalone company that will spin out on the deal's closure. It is expected to complete sometime in the second half of this year.

(This article has been updated following the confirmation of the rumoured merger - Ed.).