Acquisition of Cadence Pharmaceuticals, Inc. by Mallinckrodt plc May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Cadence Pharmaceuticals, Inc. (NASDAQ: CADX) by Mallinckrodt plc (NYSE: MNK). On February 11, 2014, the two companies announced the signing of a definitive agreement pursuant to which a subsidiary of Mallinckrodt will commence a tender offer to acquire all outstanding shares of Cadence stock for $14.00 per share in cash.
Is the Proposed Merger Best for Cadence and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Cadence is undertaking a fair process to obtain maximum value and adequately compensate Cadence shareholders.
As an initial matter, the $14.00 merger consideration represents a premium to shareholders of just 26.5% based on Cadence’s closing price on February 10, 2014. This one day premium is significantly below the average one day premium of over 36% for comparable transactions in the last three years. Further, the merger consideration is below the target price of $15.00 set by analysts at Guggenheim Securities, LLC and Wedbush, Inc.
In addition, on November 5, 2013, Cadence released its financial results for the third quarter ended September 30, 2013, reporting impressive increases in net product revenue, gross margin on sales of OFIRMEV, and the number of unique end-user customer accounts that ordered OFIRMEV. Specifically, Cadence reported that its net product revenue increased 109%, or $15.1 million, over the comparable quarter 2012. Cadence further reported that the number of unique end-user customer accounts that ordered OFIRMEV increased 33% for the quarter while the gross margin on sales of OFRIMEV rose to 66% compared with 56% for the same period in 2012. In commenting on the these results, Cadence’s President and Chief Executive Officer, Ted Schroeder, remarked, “We maintained our strong performance during the third quarter, with OFIRMEV continuing to gain market share and posting year-over-year sales growth of more than 100% in each quarter of 2013.”
Given these facts, Robbins LLP is examining the Cadence board of directors’ decision to sell the company to Mallinckrodt now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Cadence shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Cadence shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.