Having spent the better part of the decade grappling with bankruptcy bids and opioid settlements, troubled drugmakers Mallinckrodt and Endo have decided to join forces to create a more flexible company and ultimately spin off their sizeable generics businesses.
Mallinckrodt and Endo are merging in a cash and stock deal worth some $6.7 billion, the companies said Thursday. Under the agreement, Endo shareholders are slated to receive a total of $80 million in cash and own 49.9% of the combined company, while Mallinckrodt shareholders will have a 50.1% piece of the pie.
Mallinckrodt will function as the holding company for the new business, with Endo to become a subsidiary of the Irish pharma, according to a March 13 press release.
The deal, which is expected to close in the second half of 2025, will see Mallinckrodt and Endo merge their portfolios of branded products, such as Mallinckrodt’s kidney disease drug Terlivaz and Endo’s testosterone injection Aveed, and also give the combined company the financial flexibility to pursue “near-term business development and long-term innovation,” Mallinckrodt and Endo said.
All told, the drugmakers project that the combined company will generate $3.6 billion in 2025 revenue, plus earnings of $1.2 billion. The new entity, which will be based out of Mallinckrodt’s Dublin headquarters following the deal’s close, will operate a total of 17 manufacturing facilities and 30 distribution centers in the U.S., Europe, India, Australia and Japan, with a global workforce of around 5,700 employees, the companies said in their release.
"The combination of Mallinckrodt and Endo brings together two essential pharmaceutical organizations to accelerate value creation for our shareholders, customers, employees, the patients we serve and our other stakeholders," Mallinckrodt’s CEO, Siggi Olafsson, said in a 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.”
Once the transaction has closed, Olafsson will take up the mantle of CEO of the combined company, while Paul Efron, a member of Endo’s board of directors, will serve as board chair for the new entity.
Additional leadership appointments—along with the location of the combined company’s U.S. headquarters and its new name—will be revealed “in due course,” Mallinckrodt and Endo said Thursday.
Aside from merging their branded businesses, Mallinckrodt and Endo ultimately aim to combine their sterile injectables and generics businesses before spinning them off into a separate, standalone company. Whether the spinoff occurs will ultimately come down to the combined company’s board of directors, Mallinckrodt and Endo said.
Thanks to tough market conditions and persistent opioid litigation, both Mallinckrodt and Endo have gone through the wringer in recent years.
Mallinckrodt first filed for bankruptcy in October 2020, citing “significant litigation and debt issues.” At the same time, the company unveiled a $1.6 billion opioid settlement to be paid to trusts in installments over several years, plus an agreement to comply with an “operating injunction” on its opioid marketing.
By Oct. 2023, the company was filing for bankruptcy again, which allowed Mallinckrodt to hive off $1 billion from the sum it owed to governments and individuals affected by the opioid crisis.
Endo, for its part, filed for bankruptcy in Aug. 2022, also motivated by lawsuits accusing the company of fueling the opioid crisis through the illegal promotion of its painkiller Opana ER, which was withdrawn from the market in 2017.
As with Mallinkcrodt’s initial bankruptcy deal, news of Endo’s financial Hail Mary was accompanied by an announcement that the company would pay $450 million over 10 years in a 36-state settlement over its opioid marketing.