Fresenius Kabi to Acquire Akorn and Merck KGaA’s Biosimilars Business in Deals Totaling $5.5 BillionBy
Fresenius Kabi, a specialty and generic pharmaceuticals company and a subsidiary of Fresenius SE & Co. KGaA, a Bad Homburg, Germany-headquartered healthcare group, has agreed to acquire Akorn, a Lake Forest, Illinois-headquartered specialty generic pharmaceutical company, and Merck KGaA’s biosimilars business in deals totaling approximately $5.5 billion.
The Akorn acquisition will account for the larger portion of the $5.5 billion. Fresenius Kabi will purchase the company for $34 per share, or $4.3 billion, plus approximately $450 million of net debt, for a total of $4.75 billion. Fresenius Kabi will gain a diverse 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. Akorn’s current product pipeline of pending abbreviated new drug applications has a QuintilesIMS market value of $9.3 billion, according to Fresenius Kabi.
In addition to gaining a product portfolio, Fresenius Kabi, which provides contract sterile manufacturing services through its Fresenius Kabi Product Partnering division, will 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.
Akorn’s board recommends approval of the transaction and merger agreement to Akorn’s shareholders. The transaction is subject to closing conditions, including regulatory review under the Hart-Scott-Rodino Antitrust Improvements Act in the US and approval by Akorn shareholders. The transaction is expected to close by early 2018.
Under the biosimilars business acquisition, which will account for EUR 670 million ($733 million) of the total $5.5 billion value of the combined acquisitions, Fresenius Kabi will pay Merck KGaA an upfront payment of EUR 170 million ($186 million) in cash upon closing and milestone payments of up to EUR 500 million ($547 million) as well as single-digit percentage royalties on future product sales. Under the transaction, Fresenius Kabi and Merck KGaA have agreed to enter into supply and services agreements, which include drug development support and manufacturing services. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the second half of 2017.
The biosimilars business is part of the healthcare business sector of Merck KGaA, and is located in Aubonne and Vevey in Canton de Vaud, Switzerland. The business is developing a biosimilars portfolio focused on oncology and inflammatory disorders, with current branded sales of around $30 billion, according to Fresenius Kabi. After completion of the transaction, the biosimilars business will continue to operate in the same locations.