Akorn to acquire certain assets from KDIL

Pharmaceutical company Akorn, Inc. has announced that it has entered into an agreement with Kilitch Drugs (India) Ltd. (KDIL) by which Akorn will acquire certain assets of Kilitch, a leading contract manufacturer of sterile injectables in India, and also of NBZ Pharma Limited.

Kelsey Kaustinen
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LAKE FOREST, Ill.—Pharmaceutical company Akorn, Inc. hasannounced that it has entered into an agreement with Kilitch Drugs (India) Ltd.(KDIL) by which Akorn will acquire certain assets of Kilitch, a leadingcontract manufacturer of sterile injectables in India, and also of NBZ PharmaLimited. The price tag for the acquisition is approximately $52 million in cashand future contingent payments that will total up to approximately $6 million,depending on the achievement of certain agreed upon milestones and financialtargets.
The assets targeted in this acquisition include KDIL's plantin Paonta Sahib in Himachal Pradesh, India, as well as the associated contractmanufacturing and international business. It also includes certain producttransfers from KDIL's Navi Mumbai plant and NBZ Pharma Limited. Akorn willacquire five cGMP manufacturing sites, together consisting of approximately230,000 square feet of manufacturing space located on over 14 acres of land.Two of the plants are completed and operational, with the other three underconstruction and expected to be operational in 2012.
"We are excited about this acquisition as it expands bothour capacities and capabilities for sterile injectables," Raj Rai, ChiefExecutive Officer of Akorn, said in a press release. "With this platform weplan to offer a speed to market, high quality, comprehensive and cost effectivesolution to our domestic customers specifically for critical care products incategories such as anti-infectives and cancer that are consistently in shortsupply."
Of the two operational plants, one is capable ofmanufacturing general injectables, in addition to being under expansion toextend its capacities and add ophthalmic capabilities as well. The other plantcan manufacture Cephalosporins in a variety of forms, including oral liquidsand solids, dry syrups and dry powder injectables. The packing configurationsthat Akorn will be acquiring include liquid, dry powder, lyophilized andprefilled syringes. The company also secures access to the Indian market, withboth active and pending product registrations in more than 25 countries inEurope, Asia, Latin America, Africa and the Middle East. The current productportfolio contains almost 300 formulations.
"Strategically, we will also establish a global footprintgiving us access to the fast growing emerging markets. Finally, thisacquisition provides us with a road map to become a leader in the genericinjectable market," said Rai in a press release.
As part of the agreement, KDIL and its promoters willseparately sign a one-year agreement, prior to the closing, in order to ensurea smooth transition for issues such as day-to-day operational oversight and thepending expansion projects. KDIL and its promoters have also signed a four-yearnon-compete agreement for the assets Akorn is acquiring as well.
This acquisition is expected to be accretive to Akorn's 2012earnings per share before the impact of transaction-related expenses such aspurchase accounting charges, integration costs and the amortization ofintangible assets. The transaction is expected to close after local regulatoryapprovals are received, in addition to the meeting of certain customaryconditions in approximately the next 90 days.
For this transaction, Akorn brought on PricewaterhouseCoopersPrivate Limited, India, to provide financial due diligence services, and alsobrought on Khaitan & Co. as its legal advisor for the deal.
SOURCE: Akorn, Inc. press release

Kelsey Kaustinen

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