April 7 (Bloomberg) -- Mallinckrodt Plc agreed to buy Questcor Pharmaceuticals Inc. for $5.6 billion to add specialty drugs in the latest industry deal that moves a U.S. company to Ireland for a lower tax rate.
Mallinckrodt, with its registered headquarters in Dublin and run from Hazelwood, Missouri, will pay will $86.08 a share for Anaheim, California-based Questcor, the companies said in a statement today. That’s 27 percent above the April 4 closing price for Questcor.
“The combined company’s earnings profile will be enhanced from sustainable cost and tax synergies beginning in fiscal year 2014,” Mallinckrodt said in the statement. “The tax synergies derive from Mallinckrodt’s Irish domicile and the future capital structure of the combined company.”
The deal also follows Mallinckrodt Chief Executive Officer Mark Trudeau’s strategy of investing money in the specialty pharmaceuticals business while reducing the company’s focus on medical imaging. The company agreed in February to buy Cadence Pharmaceuticals Inc. for $1.3 billion as part of its goal to be among the top 25 percent of specialty drug manufacturers.
Questcor rose 34 percent to $90.90 at 7:40 a.m. New York time, while increased 10 percent to $69.
The purchase adds Questcor’s H.P. Acthar Gel, which is approved for 19 uses, to Mallinckrodt’s range of branded and generic specialty drugs. Sales of the gel last year rose 50 percent to $761.3 million.The company also makes the base ingredients in other medicines.
The deal is the latest example of a U.S. company moving offshore to take advantage of Ireland’s lower tax rate. Questcor, for example, paid a 35 percent tax rate in the last quarter of 2013, while Mallinckrodt paid 29 percent.
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