Impax Laboratories: Executing Accretive Acquisitions (A&B)

Posted: 11 Nov 2019 Last revised: 14 Nov 2019

See all articles by Benjamin Esty

Benjamin Esty

Harvard Business School

Daniel Fisher

Harvard University - Business School (HBS)

Date Written: October 31, 2019


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 acquisition would cause 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? The B Case is a continuation of the events described in the A Case.

This case explores the concepts of earnings guidance and EPS accretion in the context of a major acquisition. In addition to calculating expected accretion, students must explain why executives, analysts, and investors focus so intensively on short-term earnings. To what extent is accretion value relevant? The case is also designed for students to assess Impax’s “dual platform” strategy which involves selling both generic and branded treatments. Students must assess whether the firm’s technology-based strategy provides a sustainable competitive advantage in the highly competitive market for generic drugs where Impax is a relatively small player.

Keywords: mergers, acquisitions, accounting, accretion, dilution, earnings per share, pharmaceuticals, conference call, non-GAAP earnings, generic drugs, M&A, capital structure, competitive advantage, corporate strategy, competition

JEL Classification: G34, G32, M41

Suggested Citation

Esty, Benjamin C. and Fisher, Daniel, Impax Laboratories: Executing Accretive Acquisitions (A&B) (October 31, 2019). HBS Case Nos. 220-030 and 220-031, Available at SSRN:

Benjamin C. Esty (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States

Daniel Fisher

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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