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Why Hi-Tech Pharmacal is up 23 Percent Tuesday (HITK)

ResearchShares of Hi-Tech Pharmacal (NASDAQ: HITK) are up 23 percent in early trading after announcing that Akorn, Inc (NASDAQ: AKRX) will acquire the company for $640 in cash. Akorn will pay $43.50 per share–a 23 percent gain over Hi-Tech’s August 26 closing price. The combined company is expected to have more than $500 million in annual revenues and will likely be 40 percent accretive to Akorn’s expected 2013 non-GAAP adjusted EPS.

Raj Rai, Akorn’s Chief Executive Officer, commented, “This is a transformative event for our company. The portfolio of Hi-Tech products is a great strategic fit to our currently marketed products as it diversifies our offering to our retail customers beyond ophthalmics to other niche dosage forms such as oral liquids, topical creams and ointments, nasal sprays and otics. In addition, we are excited about Hi-Tech’s product pipeline which would further enhance growth opportunities for the combined platform.”

Among the benefits of the merger listed in the release:

  • Creates a larger, more diversified specialty generics player;
  • Expands pipeline;
  • Financially Compelling and Immediately Accretive;
  • Significant Synergies Expected;
  • Strong Combined Cash Flow Allows for Rapid Debt Repayment.

[stock-tools exchange="NASDAQ" symbol="HITK" image_height="230" image_width="350"]

Disclosure: At the time of this writing, the author had no position in the company mentioned.

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