Tuesday, August 27, 2013

Investopedia: Akorn Scores A Rare Win-Win Acquisition

The world of generics and specialty pharmaceuticals includes many companies that fly below the radar of most investors, but Akorn (Nasdaq:AKRX) may be worth the time it takes to know it better. Not only is Akorn a leading player in generic ophthalmology drugs, but the company's acquisition of Hi-Tech Pharmacal (Nasdaq:HITK) looks like an all-too-rare case where both parties in the deal come out ahead.

Investors who took my advice regarding Hi-Tech a year ago are sitting on gains of nearly 50% (though the intervening 14 months was not smooth), but I'm not sure I'd rush to reinvest the proceeds into Akorn. Although I do like Akron and I believe this deal strengthens the company, the valuation there doesn't leave a lot of upside unless Akorn can drive even better synergies than its guidance suggests.

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