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Lannett to acquire Kremers Urban Pharmaceuticals for $1.23 billion

Staff writer ▼ | September 4, 2015
Lannett Company has signed a definitive agreement to purchase Kremers Urban Pharmaceuticals, the U.S. specialty generic pharmaceuticals subsidiary of global biopharmaceuticals company UCB S.A., for $1.23 billion, plus potential contingency payments.
Kremers Urban Pharmaceuticals
Acquisition   Lannett expects to receive a significant tax benefit
Lannett believes the acquisition will be accretive to adjusted EPS in fiscal 2016 in the mid- to high-single digits and 20% to 25% in fiscal 2017.

Lannett expects to receive a significant tax benefit with a value in excess of $100 million. Lannett expects 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.

The acquisition adds a diversified commercial product portfolio of 18 products. The combined company generated pro-forma revenues of more than $800 million for the 12 months ended June 30, 2015.

KU brings a strong pipeline that includes 11 product applications pending at the FDA, of which five include Paragraph IV certifications, and 17 product candidates in various stages of development.

KU brings additional research and development 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 square foot state-of-the-art facility in Seymour, Indiana, which has substantial manufacturing and warehousing capacity, as well as dedicated product development space.

Lannett believes that there is an opportunity for synergies through enhanced efficiencies and economies of scale. Cost savings are anticipated immediately following the transaction and increasing to more than $40 million annually after the third year.