Lannett To Buy Kremers For $1.23 Bln.; Stock Up 21%

(RTTNews) - Generic drugmaker Lannett Co Inc (LCI) on Wednesday agreed to buy Kremers Urban Pharmaceuticals Inc (KU), the U.S. specialty generic pharmaceuticals unit of UCB S.A. (UCBJF, UCBJY), for $1.23 billion, plus potential contingency payments.

Lannett expects the deal to be accretive to adjusted EPS in fiscal 2016 in the mid- to high-single digits and 20% to 25% in fiscal 2017.

The deal is expected to close in the fourth quarter of calendar 2015, Lannett said.

Lannett expects to receive a significant tax benefit as a result of 338(h)(10) election with a value in excess of $100 million.

With Kremers, we are adding a highly profitable business and creating a specialty pharmaceuticals company that has substantial size, scale and reach, said Lannett CEO Arthur Bedrosian.

Lannett said the deal 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 2015.

KU brings a strong pipeline that includes 11 product applications pending at the FDA.

Lannett said cost savings are anticipated immediately following the transaction and increasing to more than $40 million annually after the third year.