Mallinckrodt PLC, a branded pharmaceutical company, is acquiring Ikaria Inc. for $2.3 billion in a transaction funded with roughly $1.3 billion in debt and $1 billion in cash. While we calculate the transaction to result in Mallinckrodt's leverage ratio exceeding 5x in the short term, we forecast the company's strong cash flow to result in an improvement in its debt to EBITDA ratio to 4.6x by the end of 2016, largely consistent with our current expectation for the rating. We are affirming our ratings on the company, including our 'BB-' corporate credit rating and the existing issue-level ratings. The stable rating outlook reflects our expectation that double-digit revenue growth and strong cash flow generation will result in Mallinckrodt's leverage improving
