The Deal: Akorn Acquires Hi-Tech Pharmacal for $540M

NEW YORK ( TheStreet) --Specialty pharmaceuticals firm Akorn ( AKRX) said Tuesday it would acquire Hi-Tech Pharmacal ( HITK) in a $540 million cash deal that would expand the maker of eye-care products into new areas.

Terms of the deal call for Akorn to pay $43.50 per share in cash for Hi-Tech, a premium of 23.5% to the Amityville, N.Y.-based target's Aug. 26 close. The deal values Hi-Tech's equity at $640 million, with Akorn also taking control of Hi-Tech's $100.6 million in cash and cash equivalents.

Hi-Tech is a developer and manufacturer of generic and branded prescription and over-the-counter products including a range of oral solutions, topical ointments and creams, nasal sprays, otics, sterile ophthalmics and sterile ointment and gels products. The company's brands include Diabetic Tussin, DiabetiDerm, DiabetiSweet, Zostrix, Nasal Ease and Sinus Buster.

Akorn, of Lake Forest, Ill., is best known as a maker of generic eye-care products. The company said in a statement that the deal would create a more diversified generics manufacturer, and expand its pipeline. Akorn currently has 57 new drug applications filed with the Food and Drug Administration. Hi-Tech has 18 applications pending.

The buyer said it believes it can extract upwards of $20 million in annual savings within 12 months and create a combined company with more than $500 million in sales.

"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," said Akorn CEO Raj Rai. "In addition, we are excited about Hi-Tech's product pipeline which would further enhance growth opportunities for the combined platform."

Akorn said it intends to fund the deal via a combination of Hi-Tech cash assumed and a $600 million term loan to be provided by JPMorgan Chase.

JPMorgan Securities is acting as financial adviser to Akorn, with a Kirkland & Ellis team of Keith Crow, Joshua Zachariah and David Fox joining with attorneys with Polsinelli PC to provide legal advice.

Hi-Tech was advised by Nomura Securities International, Arent Fox and Tashlik Goldwyn Crandell Levy.

-- Written by Lou Whiteman in New York

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