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Mallinckrodt pullback a buying opportunity?

When shares of a good company fall swiftly, Jim Cramer always looks to see if the pullback presents opportunity.

And the decline in Mallinckrdot was no exception.

Shares of the specialty pharma company tumbled on Monday, as much as 10%, after the drug maker announced plans to buy Questcor Pharmaceuticals for about $5.6 billion.

Investors were cautious of the acquisition, with Questcor facing federal probes into its marketing practices related to its multiple sclerosis drug, Acthar Gel.

Peter Dazeley | Photographer's Choice RF | Getty Images

However, when Jim Cramer asked Mark Trudeau about the issue, the Mallinckrodt CEO assured him that the company had performed due diligence and said, "Mallinckrodt's history of quality and integrity would not be jeopardized by the acquistion. We feel quite comfortable with this deal," he said.

And, he added, the acquisition should present synergies that could boost profits significantly. "The Questor acquisition enables us to further develop highly specialized areas where we already have significant expertise," Trudeau said

Mallinckrodt, which was spun off from Covidien in July of last year, said it ultimately expects the deal to boost adjusted earnings in 2014 and significantly drive adjusted profits in 2015.

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"Remember, I am all about breakups as a way to unlock value, and one of the ways that works is by allowing companies that get spun-off, like Mallinckrodt, to focus on their own business and make smart acquisitions," Cramer said.

"The deal to acquire Questcor pushes Mallinckrodt further into the lucrative specialty drug market," Cramer added. That should be accretive. "If the deal works out, I think the stock, at current levels, is exceedingly cheap."

Reuters contributed to this report

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