Sucampo Pharmaceuticals, Inc. Stock Climbs On Mallinckrodt PLC Buyout Deal

Sucampo Pharmaceuticals, Inc. (Nasdaq: SCMP) stock surged in early trading on Tuesday after the company finalized an agreement to sell itself to Mallinckrodt PLC (NYSE: MNK) for $2.1 billion. Excluding debt, the acquisition is valued at approximately $840 million.

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Sucampo Pharmaceuticals to be acquired by Mallinckrodt

Mallinckrodt will pay $18 per share, which is a 6% premium on the price of Sucampo Pharmaceuticals stock at the close of regular trading hours on Friday. Thomson Reuters data indicates that the acquisition’s equity value is based on about 46.64 million outstanding shares of the company. Mallinckrodt plans to pay for the acquisition using a combination of cash on hand and by borrowing under its current revolving credit facility and under a new secured term loan. The acquisition will be completed under its subsidiary Sun Acquisition Co.

According to Reuters, the biopharmaceutical firm’s shares have climbed by approximately 14% since earlier this month before Bloomberg initially reported that it was considering being acquired after another firm had expressed interest in buying it out.

Mallinckrodt tries to support its stock price

In contrast, Mallinckrodt stock has tumbled by more than 50% year to date, driven lower by a handful of major setbacks. According to The Wall Street Journal, a sharp decline in sales of the company’s opioid drugs has pulled its stock down after regulators began scrutinizing its “aggressive sales practices,” and the broader crackdown on opioid prescriptions hasn’t helped either.

Bloomberg adds that Mallinckrodt’s autoimmune and rare disease drug Acthar has also been an overhang due to controversy regarding its very high price tag. Further, the company lost a court ruling for its respiratory treatment for infants, INOmax, which means generic versions of it could be coming to the market soon. Meanwhile, Mallinckrodt’s own generic-drug segment has been struggling. Well-known research firm Citron has been targeting the drug maker this year, arguing that its stock is heading to $0 and even accusing its CEO of “fraud.”