Mallinckrodt to sell BioVectra unit for $250m

Mallinckrodt Pharmaceuticals shares surged in pre-market trade on Tuesday after the company said it has agreed to sell its BioVectra unit to private equity firm HIG Capital for around $250m.

Under the terms of the deal, Mallinckrodt will receive an upfront payment of $135 and a long-term note of $40m, along with contingent payments of up to $75m.

President and chief executive officer Mark Trudeau said: "This transaction continues to advance Mallinckrodt's strategic focus on branded, high-growth biopharmaceuticals by monetising a non-core business.

"While we recognise the longer-term growth potential for BioVectra, we believe that the structure of this deal enables us to participate in the future success of the business, and therefore we see this sale as the best option for both Mallinckrodt and BioVectra moving forward."

BioVectra is a contract development and manufacturing organisation (CDMO) whose global client base includes many of the top biopharmaceutical companies in the world.

Proceeds from the deal, which is expected to close in the fourth quarter, will be used for capital allocation.

Last week, Mallinckrodt agreed to pay $30m to settle allegations with two Ohio counties that it contributed to the opioid epidemic. The company said on Friday that as part of the settlement - which means it will avoid a trial - it had agreed to pay $24m in cash and donate $6m in generic products, including addiction treatment products.

At 1330 BST, the shares were up 12.4% in pre-market trade to $2.36.