Analyst: Akorn Could Be Sold For As Much As $34 Per Share, But There's Double-Digits Downside If Deal Doesn't Happen

Last week, Fresenius Kabi, a subsidiary of Fresenius Medical Care AG & Co. (ADR) (NYSE: FMS) said it was looking into the possibility of acquiring Akorn, Inc. (NASDAQ: AKRX).

Since the announcement, shares of the latter have spiked more than 30 percent, currently trading close to $32.75.

In a report issued Monday, Leerink analysts Jason M. Gerberry and Etzer Darout weighed in on the issue, arguing that Akorn complements Fresenius and that a competitive bidding for the former seems unlikely. The experts set an estimated takeout valuation of $32–$34 per share, based on comparable deal multiples.

This target implies very little to zero upside potential from current stock prices; on the other hand, if the deal does not materialize, the downside potential comes in double digits – as Leerink values the company at roughly $22 or $23 per share.

Akorn’s Contribution

According to the research report, Gerberry and Darout believe Akorn would provide Fresenius with “an expanded injectable business and a top US generic ophthalmic business while adding a few other specialty dosage forms.”

From the acquirer’s perspective, the purchase would add a few cost synergies, estimated at around $100 million.

Having said this, they noted that both companies pay very elevated tax rates of approximately 31 percent, so, “it's unclear if financial synergies are a driving force behind the potential acquisition.”

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