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With inversion pushback mounting, Akorn eyes bid for UCB subsidiary

September 12, 2014
Life sciences

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The threat of action from lawmakers may have put a damper on pharma’s tax inversion frenzy, but it has not stopped the wave of deals that are taking American drugmakers overseas. Next up could be Illinois’ Akorn, which is reportedly looking into a bid for Belgian pharma UCB’s U.S. subsidiary.
The Lake Forest pharma is one of a small number of companies exploring a buyout of New Jersey-based Kremers Urban Pharmaceuticals, sources tell Reuters. Back in August, the news service reported that UCB was interested in hiving off the business in a slim-down effort, another pharma trend that’s currently in vogue.
With a pickup of Kremers, Akorn could shift its tax domicile to Europe–cutting down its relatively high rate, Reuters says. Akorn, with a market cap of $3.8 billion, will pay an estimated 37% this fiscal year, compared with the industry average of 23%.
Kremers, which makes specialty generics products, would also build up Akorn’s own specialty lineup, which includes ophthalmic and injectable offerings. But there may be other suitors on hand as well, with Impax Laboratories, Lupin and Lannett among those for whom Kremers could make an attractive target.
U.S. political pressure on companies eyeing tax-fueled deals has been mounting, with Treasury Secretary Jack Lew announcing on Monday that his department planned to make a decision “in the very near future” about how to stem the inversion tide. Industry-watchers have said the threat of action from lawmakers could be holding some transactions up–like Hospira’s reported deal for the nutrition unit of French company Danone, which recently stalled.
But others–including pharma giant Pfizer–are pressing full steam ahead to snag a tax break. Earlier this week, company execs told Bernstein Research analyst Tim Anderson that without one, Pfizer can’t properly compete with overseas companies–meaning it’ll be on the lookout whether or not it can get former target AstraZeneca ($AZN) to come to the table.
By Carly Helfand

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