Mallinckrodt agrees deal to exploit Irish tax base
Pharma firm Mallinckrodt has agreed to buy Questcor Pharmaceuticals for $5.6bn (€4bn) to add specialty drugs in the latest industry deal that moves a US company to Ireland for a lower tax rate.
Mallinckrodt, with a registered headquarters in Dublin and run from Hazelwood, Missouri, will pay $86.08 a share for Anaheim, California-based Questcor.
"The combined company's earnings profile will be enhanced from sustainable cost and tax synergies beginning in fiscal year 2014," according to Mallinckrodt.
"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 for $1.3bn (€947m) as part of its goal to be among the top 25pc of specialty drug manufacturers.
The Questrcor deal is the latest example of a US company moving offshore to take advantage of Ireland's lower tax rate.
Questcor, for example, paid a 35pc tax rate in the last quarter of 2013, while Mallinckrodt paid 29pc.
The corporate tax rate in Ireland is 12.5pc.
The purchase adds Questcor's HP 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 50pc to $761.3m (€554m) .
The company also makes the base ingredients in other medicines.