Impax Laboratories: Executing Accretive Transactions (A)

Impax Laboratories was a technology-based pharmaceutical company that used a “dual platform” strategy to sell both generic and branded treatments. While Impax had grown organically for most of its history, it was beginning to use major acquisitions for growth. In the early morning of June 21, 2016, the firm issued a press release announcing it was buying a portfolio of generic drugs from Teva for $586 million in cash. The leadership team (CEO, CFO, and Head of Investor Relations) was now preparing for a conference call with analysts and investors to describe the deal’s acquisition price, strategic rationale, and financial impact. Like its first major acquisition—the acquisition of Tower Holdings in 2014 for $700 million—the Teva acquisition was expected to be immediately accretive (i.e., the firm’s expected earnings per share in 2016 would increase). Was the leadership team ready to answer the full range of questions investors might ask and to explain the deal’s strategic rationale and financial implications in compelling ways? And would investors react as favorably to the Teva announcement as they had when Impax announced the Tower Holdings acquisition—Impax closed up 12% that day?