Drugmakers Mallinckrodt and Endo, both emerging from bankruptcy after facing lawsuits over their involvement in the U.S. opioid crisis, announced a $6.7 billion merger on Thursday. The deal will create a new company with a strong U.S. presence, focusing on generic drugs and treatments for rare diseases.
Mallinckrodt CEO Siggi Olafsson said the merger makes sense because the companies’ products and operations complement each other. He also noted that their substantial U.S.-based manufacturing facilities could benefit from President Donald Trump’s tariffs on imported goods.
“We saw the tariffs as an opportunity,” Olafsson told Reuters. He emphasized that having a manufacturing base in the U.S. for many key products would be advantageous for the combined company.
Under the terms of the deal, Endo shareholders will receive $80 million in cash and own 49.9% of the merged company. Mallinckrodt shareholders will hold the remaining stake. The merger, with an enterprise value of $6.7 billion, will create a U.S.-focused company that also operates in markets like Europe, India, Australia, and Japan. The new company will be listed on the New York Stock Exchange.
Both companies were struggling before the merger. Mallinckrodt faced declining revenue and lawsuits linked to the addictive nature of its opioid drugs. Endo, similarly, faced challenges due to falling opioid sales. The merger aims to transform these companies into a major player in the U.S. generic drug and healthcare market, specializing in urology, autoimmune diseases, and rare conditions.
The merger also comes at a time when U.S.-based companies may have an advantage amidst uncertainty in the global healthcare market. U.S.-focused deals are insulated from some of the policy changes under the Trump administration, such as FDA leadership changes and drug pricing pressure, which have impacted mergers and acquisitions in the sector.
Olafsson, who will be CEO of the combined entity, noted that U.S. manufacturing would help the company compete in a crowded market of more than 200 generic drug makers. He also said that disruptions, like the COVID-19 pandemic, have shown the value of domestic production.
“It’s a very crowded market,” Olafsson said. “But U.S.-based manufacturing gives us an edge, especially after the pandemic showed how disruptions in Asia can affect supply.”
The merger is expected to close in the second half of 2025. The new company will employ around 5,700 people and continue to operate primarily in the U.S., with a presence in other global markets.
Both companies still sell generic opioids, but the opioid market has shrunk due to tighter regulations and public scrutiny. Olafsson said the companies have had to raise quality control standards, particularly in the U.S., despite the higher cost of labor compared to Asia.
“We’re proud of our U.S.-based manufacturing, even though it costs us more,” Olafsson added.
In addition to the merger, the companies plan to separate their generic drug businesses and Endo’s sterile injectables unit, which will be sold or spun off after the deal concludes.
Mallinckrodt, based in Dublin, filed for bankruptcy twice: once in 2020 due to its debt and opioid-related lawsuits, and again in 2023 because of declining sales of its branded drugs. The company managed to cut $1 billion from its opioid settlement during its second restructuring.
Endo filed for bankruptcy in 2022 and completed its restructuring last year. After the merger, Endo will operate as a fully-owned subsidiary of Mallinckrodt.
Lazard served as financial adviser to Mallinckrodt, while Goldman Sachs advised Endo on the deal.
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