Mallinckrodt and Endo Announce $6.7B Merger, Plan to Spin Off Generics Business

In a significant move that reshapes the pharmaceutical landscape, troubled drugmakers Mallinckrodt and Endo have officially announced their merger in a cash and stock transaction valued at $6.7 billion. The deal, expected to close in the second half of 2025, aims to create a more robust and flexible entity capable of pursuing drug licensing deals and broadening its therapeutic focus.

Merger Details and Leadership Structure

Under the terms of the agreement, Endo shareholders will receive Mallinckrodt stock and a share of $80 million in cash, ultimately owning 49.9% of the combined company. Mallinckrodt shareholders will retain a 50.1% stake in the new entity, which will continue to be listed on the New York Stock Exchange.

Siggi Olafsson, current CEO of Mallinckrodt, will lead the merged company as CEO and president, while Paul Efron, a current Endo board member, will serve as Chair of the combined company's Board. The new entity will be headquartered in Dublin, Ireland, with its U.S. headquarters and official name to be announced at a later date.

Financial Outlook and Strategic Vision

The combined company is projected to generate approximately $3.6 billion in revenue and $1.2 billion in adjusted EBITDA for 2025. Executives emphasize that the merger will create "two highly complementary businesses" and leverage cost savings of $150 million annually within three years.

Olafsson stated, "This exciting combination will create a larger and more diversified entity with the scale and resources needed to unlock the full potential of both companies." The merger is expected to provide the financial flexibility to pursue near-term business development opportunities and long-term innovation, marking a shift from the companies' previous focus on expanding markets for existing brands.

Planned Spinoff of Generics and Injectables

In a strategic move, the companies have announced plans to combine and spin off their generics businesses into a separate entity, pending Board approval. This new business will comprise Endo's sterile injectables and both companies' generic pharmaceuticals divisions. The exact structure of this separation will be determined after the merger is completed, with Olafsson noting that the board will "make the best decision going forward."

Background and Recent Challenges

Both Mallinckrodt and Endo have faced significant financial and legal challenges in recent years, primarily related to their involvement in the opioid crisis. Mallinckrodt filed for bankruptcy twice, first in October 2020 and again in October 2023, ultimately reducing its opioid settlement obligations by $1 billion. Endo filed for bankruptcy in August 2022, agreeing to pay $450 million over 10 years in a 36-state settlement regarding its opioid marketing practices.

The merger represents a pivotal moment for both companies as they seek to move beyond their troubled pasts and create a stronger, more diversified pharmaceutical entity. With a combined portfolio of branded products, including Mallinckrodt's kidney disease drug Terlivaz and Endo's testosterone injection Aveed, the new company aims to leverage its expanded resources to pursue growth opportunities and innovation in the pharmaceutical sector.