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Mallinckrodt Acquires Questcor, to Join S&P 500 As Well

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Mallinckrodt’s (MNK) shares inched up 1.1% after the company announced the completion of its acquisition of Questcor Pharmaceuticals, Inc. in a deal valued at approximately $5.8 billion. Meanwhile, Mallinckrodt is also set to join the S&P 500 after market closes on Aug 18.

Mallinckrodt-Questcor Transaction

The Mallinckrodt-Questcor transaction was completed post strong approval by shareholders of both the companies. As per the terms of the deal, shareholders of Questcor received $30.00 per share in cash and 0.897 Mallinckrodt shares for each share of Questcor common stock.

The transaction is expected to be immediately accretive to Mallinckrodt's bottom line in fiscal 2014 and significantly accretive in fiscal 2015.

Mallinckrodt’s EPS guidance (provided earlier this month along with third quarter fiscal 2014 results) of $4.00 to $4.30 excludes the impact of the Questcor acquisition. Mallinckrodt plans to provide guidance for fiscal 2015 which will include the Questcor deal in October.

Questcor's lead product H.P. Acthar Gel (approved for 19 indications including acute exacerbations of multiple sclerosis and infantile spasms) is expected to be a strong complement to Mallinckrodt’s portfolio of specialty brands, which include Ofirmev, Exalgo and Xartemis XR. H.P. Acthar Gel generated revenues of $761.3 million in 2013, up 49.6%.

Mallinckrodt carries a Zacks Rank #1 (Strong Buy). Investors looking for other well-ranked stocks in the health care sector can consider Akorn, Inc. (AKRX), Acura Pharmaceuticals, Inc. (ACUR) and AstraZeneca (AZN). While Akorn carries a Zacks Rank #1 (Strong Buy), AstraZeneca and Acura are Zacks Rank #2 (Buy) stocks.

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