(Reuters) – Dublin-based drugmaker Mallinckrodt Plc strengthened its presence in U.S. hospitals as it agreed to buy privately held Ikaria Inc, a maker of a respiratory drug and its delivery system, for $2.3 billion.
Shares of Mallinckrodt, a seller of generics, specialty drugs and medical imaging agents, jumped as much as 6.7 percent to a record $123.95.
The deal gives Mallinckrodt access to INOmax, which Ikeria says is the only approved product to treat hypoxic respiratory failure in infants. The device that delivers nitric oxide has been available in the market for about a decade and a half.
Hypoxic respiratory failure affects about 25,000-30,000 babies born each year in the United States. INOmax currently caters to about half of that population, Mallinckrodt CEO Mark Trudeau said in a call on Thursday.
Ikaria, owned by a group of investors led by private equity firm Madison Dearborn Partners LLC, is testing INOmax for treating other breathing difficulties and a type of high blood pressure that affects arteries in the lungs and heart.
Madison Dearborn will get 2.8 times the $224 million it invested in Hampton, New Jersey-based Ikaria a little over a year ago, a person familiar with the matter said.
New Mountain Capital, which invested about $220 million in 2007, will receive as much as $880 million, other people familiar with the matter said.
Analysts from at least three brokerages — BMO Capital, Leerink Swann and Oppenheimer & Co — said the deal made sense for Mallinckrodt.
The deal comes a year after Mallinckrodt, spun off from Covidien Plc in 2013, bought Questcor Pharmaceuticals Inc for $5.2 billion.
Mallinckrodt, which claims to have its products in almost every U.S. hospital, diagnostic imaging center and pharmacy, said it expects Ikeria to add at least $150 million to its sales and 25 cents to earnings per share for the year ending September.
Mallinckrodt, which recorded sales of $866.3 million in its first quarter ended Dec. 26, plans to fund the deal with a combination of cash on hand and debt.
Goldman Sachs is Mallinckrodt’s financial adviser, and Wachtell Lipton Rosen & Katz and Arthur Cox in Ireland its legal advisers. Ikaria’s legal adviser is Kirkland & Ellis LLP.
Mallinckrodt shares were up 4.3 percent at $121.18 on the New York Stock Exchange in afternoon trading.
BY VIDYA L NATHAN AND GREG ROUMELIOTIS (Additional reporting by Rosmi Shaji in Bengaluru; Editing by Joyjeet Das)