By Tamara Mathias and Akankshita Mukhopadhyay
(Reuters) - Mallinckrodt Plc (N:MNK) said on Tuesday it would buy Sucampo Pharmaceuticals Inc (O:SCMP) for about $840 million (£628.8 million) to snap up constipation drug Amitiza and a clutch of experimental rare disease treatments, as it battles declining sales of its biggest drug, Acthar.
Acthar, a treatment for infantile spasms and multiple sclerosis, contributes 42 percent to Mallinckrodt's overall revenue.
But the drug's third-quarter sales of $308.7 million missed analysts' estimates by $17.9 million, according to brokerage Stifel, and the company said it expected a further decline in the fourth quarter.
Previously, Mallinckrodt came under fire for its exorbitant pricing of the drug, which had a price tag of over $34,000 in January.
Mallinckrodt said on Tuesday it offered $18 per Sucampo share held, representing a premium of about 6 percent to the stock's Friday close.
The stock has gained about 14 percent since Dec. 6, a day before Bloomberg reported that Sucampo was considering selling itself after receiving takeover interest.
Sucampo's shares rose 5 percent in early trading, while Mallinckrodt was up 6 percent.
"I'm a little surprised that Mallinckrodt is the buyer," Jason Kolbert, an analyst at Maxim Group, told Reuters, adding the deal value is disappointing to long-term investors in Sucampo, who were banking on the success of its pipeline.
Sucampo is developing drugs for two rare genetic diseases, likely to command a high price if successful, as alternative treatments are sparse.
However, analysts believe Mallinkrodt's valuation of Sucampo seems to be principally based on the value of Amitiza. Sucampo's management is "just grabbing a quick exit strategy" with the deal, Kolbert said.
The equity value of the deal is based on 46.64 million outstanding Sucampo shares as per Thomson Reuters data. Including debt, the deal is valued at about $1.2 billion, the companies said.
Mallinckrodt said it expects to fund the deal through borrowings under an existing revolving credit facility, a new secured term loan facility and cash on hand.
Assuming a first-quarter 2018 close, Mallinckrodt said it expects the deal to add at least 30 cents per share to its 2018 adjusted earnings and at least double that amount in 2019.
Deutsche Bank (DE:DBKGn) was Mallinckrodt's financial adviser and Wachtell, Lipton, Rosen & Katz its legal adviser.
Jefferies LLC served as Sucampo's financial adviser, while Cooley LLP was its legal adviser.