Mallinckrodt plc Pays $1.3B For Buying Cadence Pharmaceuticals Inc. (NASDAQ:CADX)

Posted by Beth Hart February 12, 2014 0 Comment 811 views


On 11th February, it was reported that $1.21 billion market capped drug maker Cadence Pharmaceuticals, Inc. (NASDAQ:CADX) has agreed to be acquired by Mallinckrodt plc. The deal was consummated at $14 per share of San Diego drug maker, hence taking the valuation of the deal close to $1.3 billion. In return, Mallinckrodt plc (MNK: Quote) will get to fully monetize the high of the drug “OFIRMEV” which has been touted as a strong contender for pain relief medicine.

Stock Market Cheers The Buyout

When the news of the agreement got public, the investors made a beeline to buyout both stock. As a result, Cadence Pharmaceuticals, Inc. (NASDAQ:CADX) stock posted a 26.4 percent increase in valuation, while Mallinckrodt plc went up by 9.6 percent during trading on 11th February. The cash buyout will be raised by one of Mallinckrodt subsidiaries issuing securing senior notes. As a interim measure, Mallinckrodt has initiated negotiations with Deutsche Bank Securities Inc. to raise gap financing which will help cover part of the takeover expenses. On successful completion, the merged company is expected to add incremental revenue to the acquirer from fiscal year 2014 itself.

Full Potential of “OFIRMEV” Yet To Be Realized

The attractiveness of  Cadence Pharmaceuticals, Inc. (NASDAQ:CADX) to Mallinckrodt plc is due to the fact that it holds in its product pipeline, the pain relief and fever reducing drug “OFIRMEV” which it has developed internally as a intravenous drug. The drug has reached a stage of commercialization and is expected to yield close to $111 million as revenue to the acquirer in 2014. The drug had seen revenue contribution almost double from $50 million it yielded in 2013 and has benefited close to 7 million patients ever since its commercial debut in 2011.

Cadence Pharmaceuticals, Inc. (NASDAQ:CADX) had disclosed last month that the “OFIRMEV” drug has been placed on a list of approved drugs which more than 2350 hospitals across U.S subscribe too.



About Beth Hart

Beth is from New York. She has two master’s degrees and served as a lecturer in B-School. Her master’s degree is an MBA in Global Management from the University of Phoenix (2010). She has worked for small businesses, public agencies, and large corporations. She does write articles as a freelancer.

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