Akorn (AKRX) to Acquire Kilitch Drugs, NBZ Pharma Assets in $58M Deal

Akorn, Inc. (Nasdaq: AKRX), has entered into an agreement to acquire certain assets of Kilitch Drugs (India) Limited as well as certain assets of NBZ Pharma Limited, for approximately $52 million in cash and future contingent payments totaling up to approximately $6 million based on the achievement of certain milestones and financial targets.

The target assets consist of KDIL’s plant in Paonta Sahib in Himachal Pradesh, India, along with the associated contract manufacturing and international business, and certain product transfers from KDIL’s Navi Mumbai plant and NBZ Pharma Limited. The acquisition is expected to close after receiving local regulatory approvals as well as meeting certain customary conditions and consents in the next 90 days or so.

Acquisition Details

• Five high quality cGMP manufacturing sites designed for regulated markets with approximately 230,000 square feet of manufacturing space located on over 14 acres of land
  
• Two completed and operational plants and three under construction
  • The first operational plant has the capabilities to manufacture general injectables and is under expansion to expand capacities and add ophthalmic capabilities
    
    
  • The second operational plant has the capabilities of manufacturing Cephalosporins in various forms such as oral liquids & solids as well as dry syrups and dry powder injectables
    
    
  • The three plants under construction are expected to be operational in 2012 and will have the capabilities to make Carbapenems, Hormonal and Oncology related injectables
• Diversified sterile injectable packaging configurations, such as liquid, dry powder, lyophilized, and prefilled syringes
  
  
• Access to the fast growing Indian market through contract customers consisting of large domestic and multi-national pharmaceutical companies
  
  
• Active and pending product registrations in over 25 countries in Latin America, Asia, Middle East, Europe and Africa
  
  
• Current product portfolio consists of nearly 300 formulations
  
  
• KDIL and its promoters will separately sign a one year agreement prior to closing to provide a smooth transition, including day-to-day operational oversight and completion of certain expansion projects
  
  
• KDIL and its promoters have signed a four-year non-compete agreement for the acquired assets.

The transaction is expected to be accretive to 2012 EPS before the impact of transaction-related expenses such as purchase accounting charges, integration costs, and the amortization of intangible assets.PricewaterhouseCoopers Private Limited, India provided financial due diligence services and Khaitan & Co. provided legal advisory services to Akorn, Inc. in connection with this transaction.

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