Short IPXL

This company just bought two privately held companies. Its going to drain its pockets for a bit, and it will show the hit on next years financial reports. Lets take a look:

Impax Laboratories Inc. (IPXL)

 -NasdaqGS  Watchlist

26.43  2.59(10.86%) 11:52AM EDT - Nasdaq Real Time Price

Prev Close:	23.84
Open:	26.95
Bid:	26.65 x 200
Ask:	26.67 x 100
1y Target Est:	26.45
Beta:	1.34
Next Earnings Date:	4-Nov-14

Day's Range:	26.41 - 27.85
52wk Range:	19.39 - 31.04
Volume:	1,471,530
Avg Vol (3m):	653,172
Market Cap:	1.80B
P/E (ttm):	58.46
EPS (ttm):	0.45
Div & Yield:	N/A (N/A

Yes, the company is suddenly up due to the following news:

• Dawson). The new Dawson shares will trade on NASDAQ under the symbol DWSN.

6:03 am Impax Labs to acquire Tower Holdings, Inc. and Lineage Therapeutics Inc.; expected to be ~$0.90 accretive to Impax's 2015 earnings per diluted share (IPXL) : Co announced the execution of a definitive agreement under which Impax will acquire Tower Holdings, Inc., including operating subsidiaries CorePharma LLC and Amedra Pharmaceuticals LLC, and Lineage Therapeutics Inc. for $700 mln in cash, subject to certain customary purchase price adjustments. The privately-held Companies being acquired specialize in the development, manufacture and commercialization of complex generic and branded pharmaceutical products. The transaction will provide Impax with a highly-profitable and growing commercialized portfolio of products that are expected to generate full year 2014 revenues of ~ $215 mln to $225 mln and earnings before interest, taxes, depreciation and amortization of ~ $80 mln to $85 mln on a standalone basis. Assuming a close within the next six months, the transaction is expected to be ~ $0.90 accretive to Impax's 2015 earnings per diluted share. 

• Acquisitions includes operating subsidiaries CorePharma, LLC and Amedra Pharmaceuticals LLC
• Provides Portfolio of Growing, High-Margin, Complex Generic and Branded Products
• Enhances Generic Pipeline with Near-Term Opportunities
• Adds a Leading Franchise in a New Specialty Brand Therapeutic Area
• Diversifies and Expands Manufacturing and Supply Chain Capabilities
• Immediately Accretive with Opportunities for Operational Synergies
• Impax to Host Conference Call Today at 8:30 AM ET to Discuss Transaction

Seems to me that the company is going to stumble a bit with the big cash output and it will have to re position itself with the new acquisitions. That remains to be seen, and I think the rosy romance will fade a bit as the stock will wander down. Lets look at its technicals:

As you can see from the above chart, its current candle today has a long top tail and a short body, which the mechanics of this says that there was a push upwards in price and the stock could not sustain the upward push and it collapsed down into its body. This shows weakness. Plus the RSI is near the top. I expect the stock to stumble.

Stay Frosty, 

Mark