UPDATE: Akorn Acquires VersaPharm For $440M

Akorn, Inc.

today announced that it has entered into a definitive agreement to acquire VPI Holdings Corp., the parent company of VersaPharm Incorporated, for $440 million in cash. VersaPharm, a privately-held developer and marketer of multi-source prescription pharmaceuticals, has a focus in the niche therapeutic categories of dermatology, tuberculosis and hemophilia. VersaPharm has built a robust pipeline of over 20 products, including 11 ANDAs filed with the FDA, with an addressable IMS market value of over $700 million. VersaPharm's expertise in developing topical products complements Akorn's recently acquired manufacturing platform through the merger with Hi-Tech Pharmacal. This acquisition is expected to add $90 to $100 million in annual revenues and $0.10 to $0.12 in earnings per share, excluding new pipeline launches, deal amortization and acquisition-related expenses. Akorn intends to fund the transaction through approximately $445 million in term loan borrowings. Fully committed financing for the transaction has been provided by JPMorgan Chase Bank, N.A. Raj Rai, Akorn's Chief Executive Officer, commented, “This acquisition is a highly strategic fit with the recently acquired Hi-Tech platform as well as Akorn's focus on niche dosage forms. Our acquisition strategy will have resulted in doubling our revenues and product portfolio in a short period of time. With this acquisition we have further diversified our portfolio. We are also very excited about VersaPharm's robust pipeline that will further accelerate our Company's long-term growth opportunities.” VersaPharm's Chief Executive Officer, Kevin Connelly, commented, “With the support of our equity partner, Tailwind Capital, and through the efforts of our dedicated employees, VersaPharm has generated exceptional growth since we acquired the Company in 2007. Akorn is a great fit for VersaPharm to realize the full potential of our dermatology-focused product pipeline and continue to meet the needs of our customers. We look forward to working with Raj Rai and his team to support the success of the combined entity.” The acquisition will be subject to customary conditions, including termination of the waiting period under the provisions of the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended. Pending the satisfaction of such customary conditions, Akorn anticipates closing the transaction in the third quarter of 2014. J.P. Morgan Securities LLC is acting as exclusive financial advisor and Kirkland & Ellis LLP is acting as legal advisor to Akorn in connection with this transaction. BMO Capital Markets Corp. is acting as exclusive financial advisor and Kelley Drye & Warren LLP is acting as legal advisor to VersaPharm and Tailwind Capital in connection with this transaction.