On a quest to double sales, Akorn snags specialized rival VersaPharm in $440M deal

Specialty generics maker Akorn ($AKRX) has nabbed another niche player. Fresh off the closing of its eye-care-oriented buyout of Hi-Tech Pharmacal ($HITK), the Lake Forest, IL-based drug company has snapped up VersaPharm for $440 million. The deal adds expertise in topical remedies and a near-term pipeline worth an estimated $700 million, Akorn said in a statement.

The acquisition of VersaPharm's parent company VPI Holdings is expected to add up to $100 million to Akorn's annual sales and up to $0.12 in earnings per share, Akorn said. Plus, it's "a highly strategic fit," Akorn CEO Raj Rai said. VersaPharm has a pipeline of more than 20 products, including 11 generics already filed for FDA approval.

"Our acquisition strategy will have resulted in doubling our revenues and product portfolio in a short period of time," Rai said. The deal also diversifies Akorn's slate of products, with treatments for hemophilia and tuberculosis. And VersaPharm's dermatology-focused pipeline helps Akorn beef up in an area where it's already gaining strength.

Last August, Akorn agreed to buy Hi-Tech Pharmacal for $640 million to gain access to its slate of eye drugs as well as its nasal sprays, including a generic version of GlaxoSmithKline's ($GSK) allergy spray Flonase. Like VersaPharm, Hi-Tech also brought along topical ointments. The deal made Akorn the third-biggest player in generic eye drugs.

The deal will be funded with $445 million in short-term debt, provided by JPMorgan Chase Bank. J.P. Morgan Securities was Akorn's financial advisor on the deal, with BMO Capital Markets advising VersaPharm and its private equity investor Tailwind Capital.

- read the Akorn release

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