Akorn Sues To Stop Fresenius From Escaping Merger Deal

LAKE FOREST, IL — The German medical equipment company Fresenius SE announced Sunday its plans to withdraw from a planned $4.3 billion merger agreement with Lake Forest-based generic drugmaker Akorn. A statement announcing the termination of the deal said the decision was due to "Akorn's failure to fulfill several closing conditions."

Fresenius said its decision was due to "material breaches" of FDA data regulations that were uncovered during an independent investigation. The European company said it "offered to delay its decision" in order to let Akorn complete its own investigation and present any information, but the drugmaker declined, Fresenius said.

Akorn's stock value dropped sharply on the news, losing more than 30 percent of its value. As of Monday afternoon, it was trading for under $14. Under the terms of the merger agreement announced last April and approved in July, Fresenius was set to pay $34 per share.

The Lake Forest company responded by said it "categorically" disagrees with Frensenius' assertions. It said the investigation has already been disclosed and is not a condition of closing the deal.

It followed up Monday with a lawsuit filed in Delaware chancery court asking a judge to force the deal to proceed. The company issued the following statement announcing the suit:

“Fresenius’ attempt to terminate the transaction on the pretext that the findings from the ongoing investigation are a breach of the merger agreement is completely without merit. The previously disclosed ongoing investigation, of which we have voluntarily notified and are in regular communication with the Food and Drug Administration, has not found any facts that would result in a material adverse effect on Akorn’s business and therefore there is no basis to terminate the transaction. The investigation is not a condition to closing and the only remaining condition is approval from the Federal Trade Commission. We intend to vigorously enforce our rights, and Fresenius’ obligations, under our binding merger agreement.”

The merger deal looked like a possible bargain last year but now appears to be a "wild overpayment," according to Bloomberg. Fresenius must meet the high bar of convincing a judge that Akorn "seriously misled" regulators, but it's possible there's enough evidence against the drugmaker, whose (former) chairman has been indicted on conspiracy and racketeering charges and which has a "recent history of earnings restatements and blown guidance."

Related:

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