Mallinckrodt To Buy Cadence Pharma For $1.3 Bln.; Stock Surges

(RTTNews) - Mallinckrodt plc (MNK) Tuesday agreed to acquire Cadence Pharmaceuticals Inc. (CADX) for $14.00 per share in cash or about $1.3 billion in a deal that gives it access to the "high-growth" pain drug OFIRMEV.

The announcement boosted investor sentiment, with shares of both companies surging. Cadence stock jumped 26 percent to $13.97 in morning trade on the Nasdaq - a new high for the year. Mallinckrodt shares are up 9.6 percent at $65.01 on the New York Stock Exchange.

Mallinckrodt's $14.00 per share price offer implies a 32 percent premium to the trailing 30-trading-day volume weighted average price of $10.62 per share for Cadence.

The deal is to be effected via a tender offer by a unit of Mallinckrodt.

Mallinckrodt expects the deal to be immediately accretive to its fiscal year 2014 adjusted earnings, and significantly accretive to its fiscal year 2015 adjusted earnings.

Cadence is a biopharmaceutical company focused on commercializing products mainly for use in the hospital setting. Its product OFIRMEV (acetaminophen injection) is a proprietary intravenous formulation of acetaminophen for the management of pain and fever mitigation.

Last month, Cadence reported it expects net revenues of about $111 million for OFIRMEV in calendar year 2013 compared with $50 million in the prior year. The drug is on the list of medicines covered by over 2,350 U.S. hospitals and has been used to treat about 7 million patients since its launch in January 2011.

OFIRMEV will provide a strong thrust to Mallinckrodt's Specialty Pharmaceuticals segment, supplementing the portfolio of core controlled substance generics and its roster of brands like EXALGO, Gablofen, PENNSAID 2% and, if approved, XARTEMIS XR and longer term, MNK-155.

Mallinckrodt has entered into debt financing commitments with affiliates of Deutsche Bank Securities Inc. to partly fund the deal, which is expected to close some time mid- to late-March.

Meanwhile, the closure of the tender offer by the unit of Mallinckrodt is subject to customary conditions, including Cadence' stockholders tendering a majority of outstanding shares and the expiration or termination of the waiting period under the Hart Scott Rodino Antitrust Improvements Act.

The tender offer is expected to be completed mid- to late-March 2014.

Post transaction, Cadence shares will be delisted from the NASDAQ.

Cadence stock is trading at $13.97, up $2.90 or 26.15%, on a volume of 58 million shares. In the past year, the stock trended in the range of $4.45 - $13.99.

Mallinckrodt stock is trading at $65.01, up $5.70 or 9.61%, on a volume of 4 million shares on the NYSE.