Leiner Health Products will be sold to NBTY for $371 million, according to documents filed Tuesday with the U.S. Securities Exchange Commission. The sale follows a tumultuous year for the generic drug maker, sparked by a federal investigation at Leiner's Fort Mill Township plant.
New York-based NBTY, maker of the Nature's Bounty vitamin brand, submitted the highest bid at an auction Monday in New York. The sale will have to receive formal approval from a Delaware bankruptcy court, since Leiner filed Chapter 11 in March. The purchase is expected to be finalized later this summer.
Details of how the sale will impact the now-dormant Fort Mill plant were not available Tuesday. Leiner CEO Rob Reynolds last week told The Herald that at least one bidder was interested in resuming production at the plant, but it's unclear if NBTY will include Fort Mill in its plans.
"The Leiner acquisition reflects our ongoing efforts to better meet the needs of our customers by providing them with the highest quality service and continuous product supply. We continue to seek acquisitions which will enhance our position as the worldwide leader in the nutritional supplement industry and further our ongoing efforts to generate growth and increase shareholder value," NBTY Chairman and CEO Scott Rudolph said in a press release.
Company officials could not be reached for further comment.
The sale concludes an 18-month saga for California-based Leiner.
Leiner ceased production of all over-the-counter drugs and vitamins at the Fort Mill Township plant last year after a whistleblower at the plant in January 2007 reported alleged manufacturing violations to the U.S. Food and Drug Administration, according to a federal affidavit.
A federal investigation at the plant revealed multiple violations, including allowing drugs that failed quality tests to remain in the market, failing to adequately train staff, not cleaning equipment to standards and not identifying black specks found in some pills, according to an FDA report obtained by The Herald.
Recalls began last spring, and in June, 540 workers were laid off in Fort Mill.
The company's over-the-counter products formerly were sold as store brands at Wal-Mart, CVS, Costco and other retailers. Common painkillers (ibuprofen and acetaminophen) and allergy medication (loratadine) were among the drugs listed in the FDA report.
A U.S. Department of Justice Department investigation followed the FDA probe. Last month, Leiner pleaded guilty to mail fraud in connection to the investigation. Court records show federal officials said there was no evidence the drugs in question presented a public health risk. As part of the plea deal, Leiner agreed to pay a $10 million fine. No company executives face jail time.