Fresenius terminates US$4.3b Akorn takeover after probe

[BERLIN] Fresenius SE walked away from its pending US$4.3 billion acquisition of Akorn Inc after a probe found problems with product development and other data, the end of one attempt to buy a stronger position in the US generic-drug market.

The German company said its outside experts found "material breaches" of US Food and Drug Administration data-integrity standards while reviewing Akorn's operations. In a statement Sunday, Fresenius said it had offered to delay its decision until Akorn had completed its own investigation, but was turned down.

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.

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.

"We categorically disagree with Fresenius' accusations," Akorn said in its own statement Sunday, saying the issues being investigated weren't a condition to closing and wouldn't materially hurt Fresenius, therefore giving it no reason to drop the deal. "We intend to vigorously enforce our rights, and Fresenius' obligations, under our binding merger agreement."

The companies had agreed to a US$129 million termination fee if the deal fell through, Akorn said when the deal was announced in April 2017.

Bad Homburg-based Fresenius will keep pursuing a stronger position in the US generics market via organic growth, as well as through acquisitions, spokesman Matthias Link said on Sunday.

Lake Forest, Illinois-based 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 US$19.70 on Friday, about 42 per cent below Fresenius's US$34-a-share price. Fresenius shares closed at 65.70 euros and have dropped about 13 per cent in a year.

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.

Fresenius also manages hospitals in Germany and Spain and controls Fresenius Medical Care AG, the world's biggest provider of kidney dialysis. It agreed April 21 to sell its controlling interest in Sound Inpatient Physicians Holdings LLC, an acute-care services provider, for US$2.15 billion.

BLOOMBERG