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Mallinckrodt Pharmaceuticals and Endo have agreed to combine in a nearly $7bn deal after the pair emerged from bankruptcy processes linked to liabilities over the US opioid crisis.
The speciality drugmakers agreed in recent years to resolve billions of dollars of claims for selling highly addictive generic opioid painkillers, allowing them to emerge from Chapter 11 bankruptcy. Alongside Purdue Pharma, they were among the drugmakers at the centre of the US opioid epidemic.
Dublin-based Mallinckrodt paid out $700mn to victims in 2023 to settle thousands of lawsuits for manufacturing a generic version of Oxycodone. Endo, which has its headquarters in Pennsylvania, agreed in 2024 to pay $465mn to settle claims with the US government as well as $450mn to state and municipal trusts to fund opioid recovery programmes. Endo also pleaded guilty to a misdemeanour over marketing practices for its opioid product.
As part of the merger announced on Thursday, Mallinckrodt investors will receive a 50.1 per cent share in the combined company, while Endo shareholders will receive $80mn in cash and a 49.9 per cent shareholding, giving the new entity an enterprise value of about $6.7bn. The companies project the combined 2025 revenue to be $3.6bn. The new company, whose drugs treat inflammatory and autoimmune diseases as well as urology conditions, will be listed on the New York Stock Exchange.
Mallinckrodt initially filed for bankruptcy in 2020 and as a part of its restructuring finalised in 2022 created a trust to pay out $1.7bn through 2028 to opioid victims. However, it filed for bankruptcy again in 2023 after poor drug sales and heavy debts threatened its viability. As a part of the second reorganisation, Mallinckrodt slashed its obligation to the opioid trust by more than $1bn with some distressed hedge funds like Silver Point Capital taking over the company.
Mallinckrodt, Endo and the Sackler family’s Purdue Pharma have used the US Chapter 11 process to settle opioid claims, a process the companies say gets money to victims in the most efficient manner. However, critics contend that those bankruptcy deals gave permanent legal releases to the company and its managers.
A trust established in the Endo bankruptcy is currently suing McKinsey, accusing the consulting group of being the mastermind behind what it claims were Endo’s improper marketing practices. McKinsey is contesting the charges in court and denies any wrongdoing.
