Akorn Inc said late on Friday its Chief Executive Officer would retire following the drugmaker's inability to salvage its takeover deal with Germany's Fresenius SE.
The move comes after the Delaware Supreme Court on Friday upheld a decision by a lower court to allow Fresenius to walk away from its over $4 billion acquisition of Akorn that sent shares of the U.S generic drugmaker down more than 30 percent in regular trading.
Akorn said that its Chief Executive Officer Raj Rai will retire but will remain in his post till a successor is named. The company said a formal search for a new CEO is underway.
Fresenius terminated the merger deal in April, a year after agreeing to acquire Akorn, citing evidence of misconduct in reporting of drug development data to U.S. healthcare regulators.
Akorn then filed a lawsuit against Fresenius over the termination in the Delaware Chancery Court, but the judge ruled in favour of the German company in what was considered a landmark decision as Delaware judges have generally held buyers to merger deals.
"Deal lawyers are sharpening their pencils right now to figure out how to rewrite these clauses to make it either harder or easier for bidders to walk away from future deals," Joseph Grundfest, a professor at Stanford Law School said.
Akorn had argued that Fresenius Chief Executive Officer Stephan Sturm suffered buyer's remorse and directed his lawyers to construct a case to end the deal.
"Most people ...had determined that this was pretty much a long shot (for Akorn)," Gabelli & Co analyst Kevin Kedra said.
"Now they have to get their house in order and ... basically, correct the problems that led to the deal falling apart in the first place and operate in what is still a challenging generic drugs market."
Akorn shares closed down 24 percent on Friday. The stock is down nearly 87 percent this year.