On Tuesday, Mallinckrodt Plc. (NYSE: MNK) announced it will purchase Sucampo Pharmaceuticals Inc. (NASDAQ: SCMP) for about $840 million to add Amitiza, Sucampo’s constipation treatment, and a series of experimental medicines for rare diseases. The deal, which the companies have valued at $1.2 billion, including debt, will help diversify Mallinckrodt’s line of treatments as sales of its biggest drug, Acthar, have been in decline.
Mallinckrodt has faced major setbacks in recent months. Acthar, its drug for autoimmune and rare diseases, has drawn controversy over an extremely high price of $34,000. In September, INOmax, an infant-respiratory treatment, lost a court ruling and could face generic versions.
Acthar makes up 42 percent of Mallinckrodt’s overall revenue. The drug’s third quarter sales of $308.7 million fell short of analysts’ estimates by $17.9 million, according to Reuters. The company’s shares were down 53 percent this year as of Friday’s close.
Mallinckrodt will begin a tender offer at $18 a share, representing a premium of about 6 percent to the stock’s Friday close. Earlier in the month, it was reported that Sucampo was considering a sale of the business after receiving takeover interest. The stock has risen approximately 14 percent since then.
Sucampo has two drugs in late-stage clinical trials for rare diseases, which are likely to command a high price if successful. Analysts believe that executives of Sucampo are “just grabbing a quick exit strategy” being that the deal’s value is only based on Mallinckrodt’s valuation of Amitiza.
If closed in first-quarter 2018, Mallinckrodt expects the acquisition to add to adjusted diluted earnings per share by least 30 cents in 2018 and at least double that amount in 2019.