Fresenius attempts to back out of $4.75bn deal for Akorn

pharmafile | April 23, 2018 | News story | Sales and Marketing  

Fresenius has announced its intention to terminate the merger agreement with Akorn, over the $4.75 billion deal that the two companies had sealed in discussions last year.

The company explained its decision was based on: “among other factors, material breaches of FDA data integrity requirements relating to Akorn’s operations found during Fresenius’ independent investigation. Fresenius offered to delay its decision in order to allow Akorn additional opportunity to complete its own investigation and present any information it wished Fresenius to consider, but Akorn has declined that offer.”

The decision does not come as a complete surprise, after it announced only a few months ago that it would back out of the deal if its independent probe found Akorn to be in violation of FDA requirements.

According to Reuters, other breaches mentioned by Fresenius include an agreement to operate the business as usual after the merger agreement and to provide Fresenius with sufficient levels of company information.

Akorn, for its part, released a statement on the decision: “We categorically disagree with Fresenius’ accusations. The previously disclosed ongoing investigation, which is not a condition to closing, has not found any facts that would result in a material adverse effect on Akorn’s business and therefore there is no basis to terminate the transaction. We intend to vigorously enforce our rights, and Fresenius’ obligations, under our binding merger agreement.”

The situation now looks set for a lengthy legal process to determine whether Akorn was in breach of the merger agreement.

Regardless of that decision, its share price have already taken a hammering – dropping from a valuation of $35 per share, as per the merger agreement, to $19.70 after the news broke.

Share of Fresenius were up by just over 1% of the news, after investors had worried about whether the value of the deal – with a worsening US generics market.

Ben Hargreaves

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