Pharma Firms Mallinckrodt and Endo Agree to Merge in $6.7B Cash and Stock Deal

Mallinckrodt and Endo, pharmaceutical companies that have each encountered business struggles, announced Thursday a $6.7 billion merger that they contend will result in a combined entity with the scale and flexibility to grow.

When the deal closes, Endo will become a wholly owned subsidiary of Mallinckrodt. The combined company will take on a yet-to-be-determined name and is expected to trade on the New York Stock Exchange. Its headquarters will be in Dublin, where Mallinckrodt is currently based. Headquarters for the U.S., where the combined company will have most of its operations, will be determined at a later date. Globally, the combined business will have 17 manufacturing facilities, 30 distribution centers, and 5,700 employees.

Mallinckrodt and Endo each sell branded and generic products. Mallinckrodt’s portfolio includes Acthar Gel, which has approvals for treating several autoimmune and inflammatory disorders. Endo markets Xiaflex, a drug approved for Dupuytren’s contracture and Peyronie’s disease.

Each company also market opioid drugs, and both have been involved in opioid litigation that contributed to financial difficulties. Mallinckrodt reorganized under bankruptcy protection twice, first in 2020 and again in 2023. Mallinckrodt was delisted from the New York Stock Exchange following the second bankruptcy. Endo filed for bankruptcy protection in 2022; its shares trade over the counter.

The Malinckrodt/Endo merger is expected to close in the second quarter of this year. On a pro forma basis, the combined business is expected to generate $3.6 billion in revenue in 2025. In the combined company’s first year, about $75 million in pre-tax synergies are expected from integrating the two business as well as R&D savings. The plan is for the combined entity to also shed some operations. The generic pharmaceuticals businesses of both legacy companies will be combined with Endo’s sterile injectables business. That combined business will be spun out at a later date, subject to customary approvals.

With the merger, Mallinckrodt’s existing debt is expected to be refinanced while Endo’s debt is expected to remain outstanding. The two companies will finance the transaction with cash on hand as well as $900 million that Goldman Sachs has committed to Endo. Under terms of the merger agreement, Endo shareholders will receive $80 million in cash, subject to possible adjustment. Those shareholders will own 49.9% of the combined company; Mallinckrodt shareholders will own 50.1%.

The boards of directors of both companies have approved the transaction, which still needs shareholder and regulatory approvals. When the deal closes, Paul Efron, an Endo board member, will be chair of the combined company’s board. Siggi Olafsson, Mallinckrodt’s current president and CEO, will take on that role for the combined company and will also be a member its board.

“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,” Olafsson said in a prepared statement. “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.”

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