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Paulson & Co. Buys More Shares of Mallinckrodt PLC (MNK)

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Paulson & Co., the hedge fund headed by billionaire investor John Paulson bought more shares of Mallinckrodt PLC (NYSE:MNK), a global specialty pharmaceuticals company based on its latest regulatory filing with the Securities and Exchange Commission (SEC).

The filing showed that Paulson & Co. purchased 200,000 shares for $69.65 per share on July 31. The hedge fund bought additional 75,000 shares for $69.45 a share on August 1. Paulson’s firm now own total of 6,999,800 shares of Mallinckrodt PL (NYSE:MNK).

Mallinckrodt gave Paulson & Co. an option to increase stake to 20%

Paulson & Co. previously owned 6,724,800 or 11.5% of the outstanding shares of Mallinckrodt PLC (NYSE:MNK) as of June 10, 2014.  The specialty pharmaceuticals company recently granted the hedge fund an option to acquire as much as 20% stake.

Mallinckrodt to acquire Questcor Pharma

Mallinckrodt PLC (NYSE:MNK) is among the companies in the pharmaceutical industry that is active in mergers and acquisitions. Early this year, the specialty pharmaceuticals company completed its acquisition of Cadence Pharmaceuticals, Inc. (NASDAQ:CADX) for approximately $1.4 billion.

The acquisition of Cadence Pharmaceuticals, Inc. (NASDAQ:CADX) added OFIRMEV (acetaminophen) injection, a high-growth and differentiated pain product to the growing list of brands and robust specialty pharmaceuticals portfolio of Mallinckrodt PLC (NYSE:MNK).

Mallinckrodt PLC (NYSE:MNK) also agreed to acquire Questcor Pharmaceuticals, Inc. (NASDAQ:QCOR) for approximately $5.6 billion. The transaction was unanimously approved by the board of directors of both companies, subject to customary closing conditions and regulatory approvals. The companies expect to complete the deal in the third quarter this year.

Under the terms of the agreement, the shareholders of Questcor Pharmaceuticals, Inc. (NASDAQ:QCOR) will receive $86.10 per share including a $30 per share in cash and 0.897 Mallinckrodt shares for each share of Questcor common stock they own.

According to Mallinckrodt PLC (NYSE:MNK), the high-growth H.P. Acthar Gel, which generated $761.3 million net sales last year will strongly complement its broadening growth portfolio of leading specialty pharmaceutical brands.

Proxy advisory firms recommended a vote for Questcor deal

Yesterday, the specialty pharmaceuticals company announced that Institutional Shareholder Services Inc. (ISS) and Glass Lewis, the two leading independent proxy advisory firms recommended the approval for its agreement to acquire Questcor Pharmaceuticals, Inc. (NASDAQ:QCOR).

The ISS said, “Given the sound strategic rationale and positive market reaction through the date of this analysis, a vote FOR the proposed transaction is warranted.”

On the other hand, Glass Lewis said, “strategically, the deal greatly enhances the company’s scale,” and “financially, the adviser’s valuation analyses appear to us to suggest that the deal is fair, from a financial point of view, to the company’s shareholders.”

The firm added that the cash consideration provides Questcor shareholders with “some certainty of value for their shares while the stock consideration allows them to continue holding a meaningful stake in an enlarged company …”

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