Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Akorn, Inc. Fell as Much as 24.1% Today

By Maxx Chatsko - Updated Aug 24, 2018 at 12:31PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The rift with Fresenius continues to make headlines.

What happened

Shares of Akorn (AKRX) dropped by nearly 24% as investors prepared for a hearing scheduled for today regarding its spat with Fresenius, which in April pulled out of an agreement to acquire the generic drug manufacturer.

Fresenius nixed the merger agreement after alleging it had uncovered "blatant fraud at the very top level of Akorn's executive team, stunning evidence of blatant and pervasive data integrity violations," according to reporting by Reuters on the original court filing. That likely doesn't leave much room for Akorn to have a good argument about why the merger should proceed, and news trickling out of the courtroom today seems to indicate just that.

As of 3:47 p.m. EDT, the stock had settled to a 17.3% loss.

A finger pointing to a sliding stock chart on a screen

Image source: Getty Images.

So what

Investors were right to worry. According to Bloomberg, the judge in the case said he had a lot of work to do before making a decision, although the lawyer for Fresenius said it had a powerful case that Akorn violated the merger agreement. 

AKRX Chart

AKRX data by YCharts.

While investors still need more details about the results of the hearing and future direction of the proceedings, it's pretty much a forgone conclusion that Akorn and Fresenius will not be merging.

Now what

It goes without saying that these allegations of fraud are very serious and shouldn't be overlooked by investors. If true, they cast doubt on the integrity of operations. At the very least, they give both institutional and individual investors reason to park their money elsewhere -- and that seems to be what has happened so far in 2018. The best-case scenario now would be for the hearing to be decided and for all parties to move forward, but that will take time to play out.

Editor's note: This article has been corrected to note that it was a lawyer for Fresenius who said it had a powerful case.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Akorn, Inc. Stock Quote
Akorn, Inc.
AKRX
Fresenius Medical Care AG & Co. KGaA Stock Quote
Fresenius Medical Care AG & Co. KGaA
FMS
$24.99 (-1.81%) $0.46

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.