The stock price of Mallinckrodt, a global biopharmaceutical company surged after disclosing its agreement to buy Ikaria, a privately-held critical care company for $2.3 billion.
The shares of Mallinckrodt are trading $120.93 per share, up by more than 4% at the time of this writing around 11:08 A.M. in New York.
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Mallinckrodt says the deal is strategically compelling
Ikaria is focused on developing and commercializing innovative therapies and delivery systems to address the critically ill infants confined at neonatal intensive care unit (NICU) in hospitals.
According to Mallinckrodt, the transaction is strategically compelling because it would strengthen its presence in hospitals. It would expand its footprint from diagnostic radiology, multimodal pain management in surgical specialties to critical care respiratory therapies in neonatal intensive care units.
The biopharmaceutical company added that the drug device combination of Ikaria’s INOmax (inhaled nitric oxide) INOmax DSIR delivery systems will benefit from its larger hospital presence, regulatory expertise and experience in complex drug and device manufacturing.
Mallinckrodt further explained that the acquisition would create potential diversity in its nephrology rare disease pipeline. Ikaria’s team is expected to complement Mallinckrodt’s hospital platform.
The biopharmaceutical company expected the deal to add at least $150 million in net sales and accretive to its adjusted diluted earnings by $0.25 per share in the fiscal 2005. Mallinckrodt estimated that its net debt-to-EBITDA leverage ratio would be approximately 3.6 at the close of the deal. The companies expect to close the transaction in the second quarter of 2015.
Unlocking additional value from diverse products
In a statement, Mark Trudeau, president and CEO of Mallinckodt said the deal reflects the company’s commitment to transforming itself into a leading, high-performing specialty, biopharmaceutical company with a diverse and durable portfolio.
He added that they are taking decisive actions in line with the company’s road—building on key growth platforms and using Mallinckrodt’s unique ability to manage complexity to unlocking untapped addition value from diverse products and environments.
Mallinckrodt is one of the companies in the pharmaceutical industry active in mergers and acquisitions. Some of its previous acquisitions include Cadence Pharmaceuticals and Questcor Pharmaceuticals.
Daniel Tasse, chairman and CEO of Ikaria said they believe Mallinckrodt is the natural owner of Ikaria to expand further their mission of advancing critical care.
Mallinckrodt International Finance S.A. (MIFSA) entered into debt financing agreements to help fund the transaction. According to the biopharmaceutical company, its cash on hand together with the debt financing are sufficient to complete the acquisition.