Akorn acquires Hi-Tech Pharmacal for $640 million

LAKE FOREST, Ill.—Akorn, Inc. and specialty pharmaceuticalcompany Hi-Tech Pharmacal Co., Inc. have announced the establishment of adefinitive agreement under which Akorn will acquire Hi-Tech for $640 million incash.

Per the agreement, Akorn will pay $43.50 per share toHi-Tech for a total of $640 million, a 23.5-percent premium over the closingprice on August 26, the day before the announcement of the agreement wentpublic. Akorn expects to see annual synergies of between $15 million and $20million once the transaction is complete, thanks to operating efficiencies. Thetransaction is expected to be immediately accretive to non-GAAP earnings uponclosing, before synergies, and the combined company is expected to bring inannual revenues of more than $500 million.

"This is a transformative event for our company. Theportfolio of Hi-Tech products is a great strategic fit to our currentlymarketed products as it diversifies our offering to our retail customers beyondophthalmics to other niche dosage forms such as oral liquids, topical creamsand ointments, nasal sprays and otics. In addition, we are excited aboutHi-Tech's product pipeline, which would further enhance growth opportunitiesfor the combined platform," Raj Rai, CEO of Akorn, said in a press release."The acquisition of Hi-Tech will also add branded OTC products in thecategories of cough & cold, nasals and topicals to Akorn's existingTheraTears brand of eye care products. We also plan to capitalize on themanufacturing capabilities of Hi-Tech to further expand our presence in theprivate label OTC business."

Hi-Tech develops, manufactures and markets generic andbranded prescription and OTC products. The company specializes in liquid andsemi-solid dosage forms that are difficult to manufacture, producing oralsolutions and suspensions, topical ointments and creams, nasal sprays, otics,sterile ophthalmics and sterile ointment and gel products. ECR Pharmaceuticals,Hi-Tech's subsidiary, markets branded prescription products. The acquisitionwill bolster Akorn's position as a leading company in the U.S. genericophthalmic arena with Hi-Tech's product offerings, and will also bulk up itspipeline, as Hi-Tech has filed 18 abbreviated new drug applications, with acombined annual addressable IMS market size of roughly $2.6 billion.

"We are excited about the transaction as it deliverscompelling value to our shareholders. The combined portfolio of marketedproducts and products in development offer a very unique platform with greatgrowth potential. We are very pleased to be joining forces with Akorn and theirstrong management team led by Raj Rai," David Seltzer, CEO of Hi-Tech,commented in a statement.

The transaction is subject to customary closing conditions,including the termination of the waiting period under the Hart-Scott-RodinoAct. Assuming all conditions are met, Akorn expects the transaction to close inthe first quarter of next year.

Akorn brought on J.P. Morgan Securities LLC as its exclusivefinancial advisor for this transaction, with Kirkland & Ellis LLP andPolsinelli PC serving as its legal advisors. Hi-Tech enlisted Nomura SecuritiesInternational, Inc. as its exclusive financial advisor and brought on Arent FoxLLP and Tashlik Goldwyn Crandell Levy LLP as its legal advisors.

SOURCE: Akorn press release