) soared 26.5% after the company announced that Dublin-based
specialty pharmaceutical company
) is all set to acquire the former.
Mallinckrodt entered into a definitive agreement with Cadence
Pharma whereby the former will commence a tender offer to acquire
all outstanding shares of the latter for $14.00 per share in cash
or approximately $1.3 billion.
The offer price of $14.00 per share represents a 32% premium
to the trailing 30-trading-day volume weighted average price of
$10.62 per share for Cadence Pharma.
Both the companies expect to close the transaction next month.
Mallinckrodt expects the acquisition to be immediately accretive
to its bottom line in fiscal 2014. The accretion to the bottom
line in fiscal 2015 is expected to be more significant.
Cadence Pharma's sole approved product, Ofirmev, is indicated
to manage pain with adjunctive opioid analgesics as well as for
the reduction of fever. Ofirmev is Cadence Pharma's proprietary
intravenous formulation of acetaminophen.
We remind investors that the exclusive rights to Ofirmev in
the U.S. and Canada were acquired by Cadence Pharma from
) in 2006. The drug is marketed by Bristol-Myers as Perfalgan in
Europe and other parts of the world. Ofirmev was approved in the
U.S. in Nov 2010.
The addition of Ofirmev to Mallinckrodt's kitty will further
strengthen its specialty pharma segment which consists of
controlled substance generics and brands like Exalgo, Gablofen
and Pennsaid. Moreover, the acquisition will also add another
potential growth area for Mallinckrodt given Cadence Pharma's
strong presence in the hospital market.
We note that Cadence Pharma expects net product revenues from
sales of Ofirmev injection of $33.3 million in the fourth
quarter. For 2013, net revenues are projected at $110.5 million.
The growth in Ofirmev sales is fueled by robust demand.
Cadence expects net product revenue from sales of Ofirmev in
2014 to come between $173.0 million and $177.0 million.
We are positive on Mallinckrodt's acquisition of Cadence
Pharma. The year 2014 is critical for Mallinckrodt with its key
pain product Exalgo losing exclusivity. The company expects
Exalgo sales to decrease in fiscal 2014.
Hence, we believe that the acquisition will be a strategic fit
for Mallinckrodt. Sales of Ofirmev have been robust and will
boost Mallinckrodt's top line besides providing an opportunity to
diversify in the adjacent hospital market.
Cadence Pharma currently holds a Zacks Rank #3 (Hold) while
Mallinckrodt carries a Zacks Rank #2 (Buy). Right now,
) also looks attractive with a Zacks Rank #1 (Strong Buy).
BRISTOL-MYERS (BMY): Free Stock Analysis
CADENCE PHARMA (CADX): Free Stock Analysis
FOREST LABS A (FRX): Free Stock Analysis
MALLINCKRODT PL (MNK): Free Stock Analysis
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