Mallinckrodt

Mallinckrodt PLC MNK is looking to acquire The Medicines Company MDCO, a source familiar with the matter told Benzinga.

Mallinckrodt is a global specialty pharmaceuticals company with a market cap just north of $7 billion. Medicines Company is in the biopharmaceutical realm with a market cap of about $2.25 billion.

Morgan Stanley is the leading underwriter behind the deal, according to the source.

A spokesperson for Mallinckrodt told Benzinga the company does not comment on market rumors or speculation.

'Favorable Expectations'

Earlier this month, Jefferies said in a note that they favor Medicines Company as a likely takeover target in the mid-cap space, due to expectations for favorable ALN-PCSsc and carbavance data in the second half of the year.

After a volatile 2015, the Jefferies analysts would be selective into the new year as sector headwinds (like "election-year drug pricing rhetoric" and maturing and increasingly crowded markets) persist. They noted that "solid underlying fundamentals and potential for stabilization" lead them to believe substantial long-term value could still be unlocked in some companies.

Shareholder Value

On November 4, Chardan initiated Medicines Company at Buy with a $50 price target citing "investors are increasingly calling for a breakup or sale of MDCO to unlock shareholder value, and management is increasingly focused on restructuring to unlock value."

Chardan reiterated management's claims to restructure over 6-8 months and would not rule out a sale of the company." Although Medicines Company did not rule out a sale of the company, management appears more "committed to narrowing the company's operational focus rather than selling the company, and will do so by divesting or partnering non-core products and businesses to reduce cash burn," according to Chardan.