LAKE FOREST, Ill. (AP) — Akorn Inc. plans to pay $640 million in cash to buy fellow generic drugmaker Hi-Tech Pharmacal Co. Inc. in a deal that it expects will help boost its adjusted earnings immediately.
Shares of both companies jumped Tuesday morning after Akorn announced the deal.
Lake Forest, Ill.-based Akorn said that it will pay $43.50 for each share of Amityville, N.Y.-based Hi-Tech. That represents a premium of more than 23 percent over Hi-Tech's closing price Monday of $35.21.
Hi-Tech specializes in hard-to-make liquid and semi-solid dosage forms and makes a range of oral treatments as well as ointments and nasal sprays. Akorn said the combined company will exceed $500 million in annual revenue, and the deal will help it expand its retail offerings beyond eye care.
The Hi-Tech deal also would give Akorn branded, over-the-counter products in categories like cough and cold and nasal sprays.
"We also plan to capitalize on the manufacturing capabilities of Hi-Tech to further expand our presence in the private label (over-the-counter) business," Akorn CEO Raj Rai said in a statement.
Akorn expects the deal to close in next year's first quarter. It will use about $600 million in loans and assumed Hi-Tech cash to fund the acquisition.
Shares of Akorn climbed 13.4 percent, or $2.20, to $18.64 on morning trading Tuesday. The shares hit $18.98 earlier in the session, which represents a new all-time high price for the stock, according to FactSet.
Hi-Tech shares soared more than 23 percent, or $8.19, to $43.40 in morning trading.