Hi-Tech Pharmacal Co. said Tuesday it was being sold to an Illinois company for $640 million in cash.
The rapidly growing drugmaker, with headquarters in Amityville, identified the buyer as Akorn Inc., also a drugmaker.
Both are public companies with stocks traded on the Nasdaq exchange, and each has annual sales of more than $200 million.
Hi-Tech is best known as the maker of Fluticasone nasal spray, a generic version of Flonase used for allergies and sinus infections. Its popularity helped to make Hi-Tech the third-fastest-growing public company in the United States two years ago, according to Fortune magazine.
Akorn chief executive Raj Rai told stock analysts Tuesday that buying Hi-Tech would make Akorn "a larger and well-diversified generic player." He also lauded Hi-Tech's two factories in Amityville.
Hi-Tech has 447 employees, about 400 locally. Akorn, which produces TheraTears eye medicine and is based in a Chicago suburb, has nearly 1,000 workers, including more than 200 at an Indian subsidiary.
The transaction is expected to close early next year. The impact on employees wasn't disclosed.
Akorn is paying $43.50 a share for Hi-Tech, or 24 percent more than Hi-Tech's closing price on Monday.
Shares in both companies soared Tuesday after the purchase announcement. Hi-Tech closed up $7.78, or 22 percent, to $42.99 per share. Akorn was up $1.58, or nearly 10 percent, to $18.02 per share.
"Hi-Tech is getting a fair price," said analyst Timothy Chiang, who follows the company for CRT Capital Group in Stamford, Conn.
"While they've had a good run, I don't think they had the critical mass to successfully grow parts of their business . . . The reality is in pharmaceuticals you have to get bigger; everybody is consolidating," he said in an interview.
In a conference call with analysts, Akorn officials estimated the Hi-Tech purchase would create a company with sales of more than $500 million per year.
They also said Hi-Tech has manufacturing capabilities that Akorn lacks, and a planned expansion of Akorn's Somerset, N.J., factory could be shelved because of the deal. Its other plants are in Illinois and India.
Hi-Tech CEO David Seltzer said, "The combined portfolio of marketed products and products in development offer a very unique platform with great growth potential."
AT A GLANCE
Employees: 447; about 400 on LI
Products: Fluticasone nasal spray, a generic version of the prescription Flonase; generic cold and flu remedies; brand-name over-the-counter products for diabetes and allergies
History: Hi-Tech is the successor of Success Chemical Co., started in the 1930s in Brooklyn by Reuben Seltzer, grandfather of Hi-Tech CEO David Seltzer
SOURCES: Hi-Tech Pharmacal Co., Newsday research
Hi-Tech sale is LI's 2nd all-cash deal this week
The Hi-Tech Pharmacal acquisition is the second all-cash deal involving a local company in two days.
It's also the biggest sale of a Long Island business to be announced this year, said Richard Peterson of the financial data company S&P Capital IQ in Manhattan.
On Monday, another public company, Globecomm Systems Inc. of Hauppauge, said it was being bought by Manhattan-based private equity firm Wasserstein & Co. for $340 million.
Peterson said Tuesday two deals in two days doesn't mean merger mania has returned. Mergers and acquisitions locally for the first eight months of 2013 totaled $1.84 billion compared with $4.2 billion in the same period last year. The statistic measures transactions for public and private companies.
This week's deals are part of a long-term trend: The number of public companies on Long Island is shrinking. Ten years ago there were more than 80; today there are fewer than 55. -- Joe Ryan and James T. Madore