Drugmakers Mallinckrodt and Endo to Merge in Nearly $7 Billion Deal

In a move that could reshape the pharmaceutical landscape, Mallinckrodt and Endo have announced a nearly $7 billion merger, creating a global, scaled, diversified pharmaceuticals leader. This deal, expected to close in the second half of 2025, brings together two companies that have faced significant challenges due to their involvement in the opioid crisis but are now poised for a strategic transformation.

The merger, valued at approximately $7 billion, will see Endo shareholders receive $80 million in cash and own 49.9% of the combined entity, while Mallinckrodt shareholders will own 50.1%. The combined company, to be listed on the New York Stock Exchange (NYSE), projects $3.6 billion in 2025 revenue and $1.2 billion in Adjusted EBITDA. The merger aims to generate at least $150 million in annual operating synergies by Year 3 and approximately $75 million in Year 1.



The strategic combination of Mallinckrodt and Endo is expected to deliver significant strategic and financial benefits. The combined company's brands portfolio will comprise leading pharmaceutical brands across a range of therapeutic areas, including XIAFLEX®, Acthar® Gel, Terlivaz®, SUPPRELIN® LA, and AVEED®. With this enhanced commercial portfolio and a strong foundation in rare and orphan diseases, the combined brands business will be poised to deliver strong growth with an attractive cash flow profile.

The combined company will have a strong balance sheet with net leverage of approximately 2.3x expected at close, ample financial flexibility, and additional leverage capacity. This will enable the combined company's strategic focus, including building on its branded platform through near-term business development and long-term innovation, extending its leadership in existing therapeutic areas, and potentially adding capabilities in other strategic therapeutic areas.

The combined company's sterile injectables and generics business will have a complementary product portfolio across multiple delivery technologies, formulations, and dosage forms, as well as a leading controlled substances franchise. It will benefit from robust commercial and manufacturing infrastructure, extensive supply chain capabilities, and deep expertise in co-manufacturing.

The companies plan to operationally combine their respective generics businesses and Endo's sterile injectables business following the close of the transaction and intend to separate that combined business from the combined company at a later date. This separation would be subject to approval by the combined company's Board of Directors and other conditions.

The merger is expected to generate at least $150 million of annual operating synergies by Year 3 and approximately $75 million in Year 1. This financial flexibility will allow the combined company to pursue growth opportunities, including near-term business development and long-term innovation.

The combined company will have a heavily U.S.-focused footprint with a proven strong track record of high quality and reliability. The companies plan to host a joint conference call and webcast today at 8:00 a.m. ET to discuss the merger in more detail.

The merger between Mallinckrodt and Endo is a strategic move that aligns with the current trends in the pharmaceutical industry, particularly in terms of consolidation and the focus on specialty and generic drugs. The combined company will benefit from operational synergies, financial flexibility, and a diversified portfolio that positions it for growth and innovation.

In summary, the merger between Mallinckrodt and Endo is a significant strategic transformation that creates a $6.7 billion enterprise value pharmaceutical company with compelling financial implications. The transaction structure gives Mallinckrodt shareholders 50.1% ownership of the combined entity while Endo shareholders receive $80 million cash plus 49.9% ownership. The deal's financial architecture is particularly notable with projected 2025 revenue of $3.6 billion and adjusted EBITDA of $1.2 billion. The merger unlocks substantial operational efficiencies with projected synergies of $75 million in year one, expanding to $150 million annually by year three. The combined entity's expected net leverage ratio of 2.3x at closing indicates a stronger balance sheet position, providing enhanced financial flexibility for strategic acquisitions and internal investments. This moderate leverage profile represents appropriate debt capacity while maintaining operational flexibility. The planned post-merger separation of the combined generics and sterile injectables businesses signals a disciplined portfolio optimization strategy that could unlock additional shareholder value by allowing each entity to operate with more focused business models. This transaction creates immediate scale advantages while the subsequent spin-off would create two distinct investment opportunities with different growth and cash flow profiles.