IBA Molecular to Buy Nuclear Imaging Business From Mallinckrodt for $690M

Leading specialty pharmaceutical company Mallinckrodt plc (NYSE: MNK) said it agreed to sell its Nuclear Imaging business to IBA Molecular (IBAM), for $690 million, consisting of $574 million up-front, the assumption of $39 million of long-term debt, and $77 million of contingent consideration.

The move comes a few months after Belgium-based pharmaceuticals firm Ion Beam Applications SA (EBR: IBAB) and private equity firm SK Capital Partners, closed the sale of IBAM to European mid-market private equity firm CapVest Partners LP, in March 2016.

IBAM is a highly diversified global manufacturer and distributor of radiopharmaceutical products. IBAM has engineered a strong and unique product portfolio and pipeline of diagnostic and therapeutic tracers aimed at advancing the global movement towards personalized medicine and making molecular imaging/therapy a major discipline in healthcare. The company is active in the PET and SPECT segments, operates across 18 sites servicing a growing client base of public and private hospitals and health/imaging clinics in over 70 countries.

“Mallinckrodt’s Nuclear Imaging operation has a long history going back 50 years, and has been a strong cash-generating business over time. Our team has made significant progress in driving profitability over the past few years,” said Mark Trudeau, president and chief executive of Mallinckrodt.

“But with our strategic priorities focused on enlarging our portfolio in the high-growth specialty pharmaceuticals space,” Trudeau continued, “we believe the sale of our Nuclear Imaging portfolio to IBAM is the best solution for both the business itself and Mallinckrodt.”

Renaud Dehareng, chief executive of IBAM, said, “We are very excited about this acquisition. IBAM’s and Mallinckrodt’s Nuclear Imaging business’ complementary footprint and capabilities will substantially broaden our ability to serve patients globally. We are very pleased to welcome our new colleagues to IBAM upon closing and look forward to working together in this next chapter of our company’s development.”

Mallinckrodt’s Nuclear Imaging business includes a portfolio of diagnostic imaging products. Though approved for use and sold for nuclear medicine procedures in many countries, approximately two-thirds of current annual revenues from Mallinckrodt’s Nuclear Imaging business originate in the U.S. The business is a prominent global producer of the key medical isotope molybdenum-99, from which technetium-99m (Tc-99m) is derived. Tc-99m is used in roughly 80% of all nuclear medicine procedures worldwide, and Mallinckrodt is a significant U.S. and global supplier of this radioisotope2.

More than 800 Mallinckrodt employees in manufacturing, commercial, operations, and shared service roles in North America and Europe are focused on supporting the Nuclear Imaging business. Mallinckrodt has two manufacturing plants focused on nuclear medicine products and sterile-fill pharmaceutical manufacturing in Maryland Heights, Missouri and Petten, the Netherlands. This workforce and these facilities are included in the transaction and will be transferred to IBAM upon closing.

The deal is subject to approval from the U.S. Nuclear Regulatory Commission and the Committee on Foreign Investment in the United States, and clearance from relevant competition authorities. It is not subject to financing conditions as IBAM has secured all necessary debt and equity commitments required to close the transaction. Closing is expected in the first half of calendar 2017.

TAP Advisors acted as exclusive financial advisor to Mallinckrodt on the transaction.

Mallinckrodt, based in Dublin, Ireland, with its U.S. headquarters in St. Louis, Missouri, is a global business that develops, manufactures, markets and distributes specialty pharmaceutical and biopharmaceutical products and therapies, as well as nuclear imaging products. Areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics and hemostasis products; and central nervous system drugs.

In 1867, the Mallinckrodt brothers, Gustav, Otto and Edward, founded G. Mallinckrodt & Co. in St. Louis, Missouri. The Mallinckrodt family had immigrated from Germany, and Otto and Edward both returned to Germany, the leading chemical powerhouse of the time, for advanced training. Mallinckrodt Chemical Works was incorporated 15 years later. By 1898, the company had established itself as a pharmaceuticals supplier and in 1913 became the first to introduce barium sulfate as a contrast media for x-rays.

Mallinckrodt’s core strengths include the acquisition and management of highly regulated raw materials and specialized chemistry, formulation and manufacturing capabilities. The company’s Specialty Brands segment includes branded medicines; its Specialty Generics segment includes specialty generic drugs, active pharmaceutical ingredients and external manufacturing; and the Nuclear Imaging segment includes nuclear imaging agents.

TAP Advisors acted as exclusive financial advisor to Mallinckrodt on the transaction.

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