(Reuters) - Lannett Co Inc (N:LCI) said it would buy Kremers Urban Pharmaceuticals Inc, a U.S. unit of Belgian drugmaker UCB SA (BR:UCB), for $1.23 billion (804 million pounds) to expand its speciality generic drugs portfolio.
Lannett's shares jumped 20 percent in extended trading on Wednesday.
The deal also includes potential contingency payments, Lannett said on Wednesday.
Kremers Urban has 11 drug applications pending approval from the U.S. Food and Drug Administration and 17 drug candidates in development.
The company also has 18 generic drugs in the market for conditions including attention deficit hyperactivity disorder, hypertension and respiratory disease.
The combined company had pro-forma revenue of more than $800 million for the year ended June 30, Lannett said.
The deal is expected to add to Lannett's adjusted profit from 2016, the company said.
Lannett plans to fund the acquisition with a combination of term loans and cash on hand.
Morgan Stanley (NYSE:MS) and RBC Capital Markets, Lannett's financial advisers for the deal, have provided committed financing of up to $1.29 billion, the company said.
Debevoise & Plimpton LLP and Fox Rothschild LLP are Lannett's legal advisers and Roth Capital Partners LLC is the adviser to the company's board.
Lannett's shares were trading at $59.50 after the bell.