Daily News: August 29, 2013

JPMorgan to Finance Hi-Tech Pharmacal Sale to Akorn

Akorn and Hi-Tech Pharmacal Co. announced that they have entered into a definitive agreement under which Akorn will acquire Hi-Tech for $640 million in cash. According to a related 8-K filing, JPMorgan Chase and J.P. Morgan Securities issued Akorn a debt commitment letter for credit facilities consisting of up to a seven-year $600 million senior secured term loan and a five-year $75 million senior secured revolving loan facility. The 8-K noted that the term loan provides financing for the merger, repay existing debt of Hi-Tech and pay related fees and expenses. The revolver may be used by Akorn for working capital and other corporate purposes.

Hi-Tech is a specialty pharmaceutical company developing, manufacturing and marketing generic and branded prescription and over-the-counter (OTC) products. Hi-Tech specializes in liquid and semi-solid dosage forms and produces and markets a range of oral solutions and suspensions, as well as topical ointments and creams, nasal sprays, otics, sterile ophthalmics and sterile ointment and gels products. Hi-Tech’s Health Care Products division is a leading developer and marketer of OTC products. Hi-Tech’s ECR Pharmaceuticals subsidiary markets branded prescription products.

Under the terms of the agreement, Akorn will pay $640 million in cash, or $43.50 per share. This represents a 23.5% premium over the closing price on August 26. Akorn expects to achieve between $15 million and $20 million in annual run-rate synergies within 12 months of close.

Raj Rai, Akorn’s chief executive officer, commented, “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.”

J.P. Morgan Securities is acting as exclusive financial advisor and Kirkland & Ellis and Polsinelli PC are acting as legal advisors to Akorn in connection with this transaction.

Nomura Securities International is acting as exclusive financial advisor and Arent Fox and Tashlik Goldwyn Crandell Levy are acting as legal advisors to Hi-Tech.

To read the entire news release click here.