Mallinckrodt to buy Cadence Pharma for around $1.3 billion

Ireland-headquartered specialty drugmaker Mallinckrodt (NYSE: MNK), spun off by Covidien last year, has entered into a definitive agreement to acquire Cadence Pharmaceuticals (Nasdaq: CADX) which, subject to customary terms and conditions, is expected to close in mid- to late March.

Mallinckrodt will commence a tender offer to acquire all outstanding shares of Cadence for $14.00 per share in cash or around $1.3 billion on a fully diluted basis, which represents a 32% premium to the trailing 30-trading-day volume weighted average price for Cadence and 26% above the firm’s closing price a day earlier. Cadence’s shares leapt 27.5% to $14.11 in premarket trading Tuesday.

The acquisition supports Mallinckrodt’s expansion into the hospital channel and is expected to be immediately accretive to fiscal year 2014 adjusted diluted earnings per share; and significantly accretive to Mallinckrodt’s fiscal year 2015 adjusted diluted earnings per share.