Lake Forrest, Ill.-based generic drug manufacturer Akorn, Inc., is acquiring rival Amityville, N.Y.-based Hi-Tech Pharmacal Co. for $640 million to expand its eye drug portfolio to oral liquids and ointments.
Akorn will pay $43.50 per share, which represented a premium of 23.5 percent above Hi-Tech’s closing price Aug. 26, before the deal was announced.
The all-cash deal will make Akorn the third-largest U.S. generic ophthalmic player and will significantly increase its retail presence in both prescription and over-the-counter products, the companies said in a joint statement.
Hi-Tech is a specialty pharmaceutical company developing, manufacturing and marketing generic and branded prescription and over-the-counter products.
Akorn expects to achieve between $15 million and $20 million in annual run-rate synergies within 12 months of close of the deal. The combined company is expected to have annual revenues in excess of $500 million.
Akorn chief executive officer Raj Rai said, “This is a transformative event for our company. The portfolio of Hi-Tech products is a great strategic fit to our currently marketed products as it diversifies our offering to our retail customers beyond ophthalmics to other niche dosage forms such as oral liquids, topical creams and ointments, nasal sprays and otics.”
“In addition, we are excited about Hi-Tech’s product pipeline which would further enhance growth opportunities for the combined platform."
“The acquisition of Hi-Tech will also add branded OTC products in the categories of cough and cold, nasals and topicals to Akorn's existing TheraTears brand of eye care products,” Rai added.
Akorn intends to fund the acquisition through a combination of Hi-Tech cash assumed and about $600 million in term loan borrowings.
Before joining Akorn, Rai was president and CEO of Option Care, Inc., a pharmacy services provider of home infusion therapies and specialty pharmaceuticals. The Indian American currently is a member of the board of Aciex Therapeutics. Rai has a B. Tech in mechanical engineering from REC Warangal and an MBA in finance from Wayne State University.