Fresenius’ Closing of $4.3-Billion Acquisition of Akorn Faces Possible Issues with Data-Integrity Probe
Fresenius Kabi, a specialty and generic pharmaceuticals company, may face issues with its pending $4.3-billion acquisition of Akorn, a Lake Forest, Illinois-headquartered specialty generic pharmaceutical company, following Akorn’s alleged breaches of FDA data-integrity requirements relating to product development.
Fresenius agreed to acquire Akorn for $4.3 billion plus approximately $450 million of net debt, for a total of $4.75 billion in April 2017 with an expected closing in early 2018. Fresenius and Akorn say they are conducting investigations into the allegations before the close of the transaction. The companies say the turnout of the investigation could affect the closing.
Fresenius issued a statement regarding the investigation as part of its fiscal year 2017 earnings results. “Fresenius is conducting an independent investigation, using external experts, into alleged breaches of FDA data-integrity requirements relating to product development at Akorn, Inc,” the company said in a February 26, 2018 statement. “The Management and Supervisory Boards of Fresenius will assess the findings of that investigation. The consummation of the transaction may be affected if the closing conditions under the merger agreement are not met. Fresenius does not intend to provide further updates as the investigation proceeds. Fresenius continues to seek FTC [Federal Trade Commission] clearance.”
Akorn also issued a statement on the investigation status on February 26, 2018. “Akorn and Fresenius Kabi AG, with the assistance of outside consultants, are investigating alleged breaches of FDA data- integrity requirements relating to product development at the Company,” Akorn said in its statement. “To date, the Company’s investigation has not found any facts that would result in a material impact on Akorn’s operations and the Company does not believe this investigation should affect the closing of the transaction with Fresenius. The Company does not intend to provide further updates as the investigation proceeds. The Company is continuing to work to obtain regulatory clearance for the transaction.”
For Fresenius Kabi, the deal would provide the company with a portfolio of prescription and over-the-counter products, including injectables, topical creams, ointments and gels, and sterile ophthalmics as well as oral liquids, otic solutions, nasal sprays, and respiratory drugs. In addition to gaining a product portfolio, Fresenius Kabi, which provides contract sterile manufacturing services through its Fresenius Kabi Product Partnering division, expects to boost its contract sterile manufacturing capabilities with the acquisition of Akorn, which also offers that service. Akorn has five manufacturing facilities in Decatur, Illinois; Somerset, New Jersey; Amityville, New York; Hettlingen, Switzerland; and Paonta Sahib, India.