Fresenius abandons $4.3 billion Akorn deal
Akorn Inc. shares lost about a third of their value after Fresenius SE walked away from a pending $4.3 billion acquisition of the Lake Forest-based maker of generic cancer drugs in response to a probe that found problems with its product-development practices.
The German company said its outside experts found "material breaches" of U.S. Food and Drug Administration standards while reviewing Akorn's operations. Fresenius said it had offered to delay its decision until Akorn had completed its own investigation, but was turned down, setting up a potential legal battle with the U.S. company over the aborted takeover.
Investors had become increasingly wary of the deal since Fresenius announced it a year ago. Competition was eroding Akorn's profit and revenue expectations and its former chairman, John Kapoor, left the company after being arrested on separate racketeering charges.
Under the terms of the deal announced in April 2017, Akorn had agreed to pay a $129 million termination fee if the agreement fell through, Fresenius said. Akorn said in a statement Sunday that the issues being investigated weren't a condition to closing and wouldn't materially hurt the German company, therefore giving it no reason to drop the deal.
"We categorically disagree with Fresenius's accusations," Akorn said after Fresenius issued its own statement saying it was walking away. "We intend to vigorously enforce our rights, and Fresenius's obligations, under our binding merger agreement."
Fresenius disclosed its investigation, prompted by an anonymous tip, in February. Some analysts had viewed a price cut as more likely than a collapse of the deal.
Akorn's shares have traded well below Fresenius's offer price since the end of February, when the German company said violations of FDA rules could imperil the takeover. Akorn closed at $19.70 on Friday, about 42 percent below Fresenius's $34-a-share price.
Akorn would have given Fresenius's Kabi drugs unit access to a network of retail pharmacies and outpatient clinics, a broader range of potential customers for its generic drugs for cancer.