Mallinckrodt and Endo to merge

Mallinckrodt plc and Endo, Inc. today announced that they have entered into a definitive agreement to combine in a stock and cash transaction to create a global, scaled, diversified pharmaceuticals company.

"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," said Siggi Olafsson, president and CEO of Mallinckrodt. "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. 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. Endo and Mallinckrodt both have talented teams that put patients first, and I look forward to bringing our organizations together to achieve even greater success."

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Mallinckrodt and Endo plan to combine their generic pharmaceuticals businesses and Endo's sterile injectables business after the close of the transaction and intend to separate that business from the combined company at a later date. Such a separation would be subject to approval by the combined company's board of directors and other conditions.

"We believe this combination with Mallinckrodt, along with the subsequent separation of the combined sterile injectables and generics business, presents a unique opportunity to deliver significant shareholder value," said Scott Hirsch, interim CEO of Endo. "The combined company will possess a branded business with the scale, cash flow and balance sheet strength to invest in both internal and external growth opportunities, including pursuing commercial-stage assets. Additionally, the stable and robust free cash flow generated by the combined sterile injectables and generics business should enable consistent capital returns to shareholders following its separation."

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This combination brings together two complementary and synergistic companies to deliver significant strategic and financial benefits:

• Scaled and diversified branded pharmaceuticals portfolio: The combined company's brands portfolio will comprise pharmaceutical brands across a range of therapeutic areas, including XIAFLEX (collagenase clostridium histolyticum), Acthar Gel (repository corticotropin injection), Terlivaz (terlipressin), SUPPRELIN LA (histrelin acetate) and AVEED (testosterone undecanoate). With this commercial portfolio and a strong foundation in rare and orphan diseases, the combined brands business will be poised to deliver strong growth with an attractive cash flow profile, per the companies.
• Enhanced financial flexibility to pursue growth opportunities: The combined company will have a strong balance sheet with net leverage of approximately 2.3x1 expected at close, ample financial flexibility and additional leverage capacity, the organizations said. This will enable the combined company's strategic focus, including building on its branded platform through near-term business development and long-term innovation, extending in existing therapeutic areas and potentially adding capabilities in other strategic therapeutic areas.
• Scaled sterile injectables and generics pharmaceuticals business: The combined company's sterile injectables and generics business will have a complementary product portfolio across multiple delivery technologies, formulations and dosage forms, as well as a controlled substances franchise. It will benefit from robust commercial and manufacturing infrastructure, extensive supply chain capabilities and deep expertise in complex, highly regulated products, as well as a strong compliance culture.
• Strong financial profile and compelling synergy opportunities: The combined company is expected to generate pro forma 2025 revenue of $3.6 billion and pro forma 2025 Adjusted EBITDA of $1.2 billion. The combined company is expected to generate at least $150 million of annual pre-tax run-rate operating synergies by Year three and approximately $75 million of pre-tax synergies in Year 1, driven by business function integration and R&D savings from economies of scale, among other areas.
• Heavily U.S.-focused footprint: The combined company will have a robust operating footprint, primarily located in the United States and supported by capabilities in Europe, India, Australia and Japan. The combined company will have 17 manufacturing facilities, 30 distribution centers and approximately 5,700 employees at closing.
• Experienced teams with specialized expertise: Mallinckrodt and Endo's teams both possess highly specialized expertise and proven track records of high quality, reliability and compliance across their respective businesses. This includes deep clinical and regulatory expertise to drive approvals of complex drugs and devices, together with experience commercializing complex, highly regulated products.