Lannett believes the acquisition will substantially increase and diversify its revenue base with profitable specialty products
Lannett Company has signed a definitive agreement to purchase Kremers Urban Pharmaceuticals (KU), the US specialty generic pharmaceuticals subsidiary of global biopharmaceuticals company UCB SA for US$1.23 billion, plus potential contingency payments.
Lannett expects to receive a significant tax benefit as a result of 338(h)(10) election with a value in excess of $100 million. Lannett plans to fund the transaction with a combination of a fully committed term loan and cash on hand. The transaction, subject to regulatory approval and other customary closing conditions, is expected to close in the fourth quarter of calendar 2015 and has been unanimously approved by the boards of directors of Lannett and UCB.
‘For Lannett, this is a transformational acquisition that is an exceptional strategic fit and builds upon our stellar financial performance during the last few years,’ said Arthur Bedrosian, Chief Executive Officer of Lannett. ‘With KU, we are adding a highly profitable business and creating a specialty pharmaceuticals company that has substantial size, scale and reach.’
‘The acquisition diversifies and augments our current product offerings and significantly enhances our opportunities for continued growth by expanding our pipeline with a number of large market opportunity and complementary product candidates,’ he added.
‘KU brings considerable manufacturing capacity, a first class research and development team and the potential to advance our active pharmaceutical ingredients business. This transaction delivers on our objective to supplement and boost our organic growth with strategic acquisitions. We will continue to seek opportunities to build our business and enhance shareholder value,’ Bedrosian concluded.
KU brings additional R&D and regulatory expertise, particularly in the areas of difficult-to-manufacture products and Paragraph IV certifications. As part of the transaction, Lannett would receive KU's recently inspected 381,000 ft2 state-of-the-art facility in Seymour (Indiana, USA), which has substantial manufacturing and warehousing capacity, as well as dedicated product development space.
KU currently markets generic pharmaceutical products that treat a variety of conditions, including ADHD, gastro-oesophageal reflux disease, hypertension and respiratory disease. KU has eight controlled substance products with barriers to entry in various stages of development, which would expand and enhance Lannett's existing controlled substance portfolio.