Lannett Co. said it will acquire Kremers Urban Pharmaceuticals Inc., the U.S. generics unit of Belgian drugmaker UCB SA, for $1.23 billion, adding products for attention-deficit hyperactivity disorder and gastroesophageal reflux.

The acquisition will boost adjusted earnings per share by less than 10 percent in the current fiscal year, which ends next August, and by more than 20 percent the following year, Lannett said Wednesday in a statement. The companies expect to be able to reap $40 million a year in overlapping costs after the third year following the merger, which is slated to close by the end of December.

Merger activity is heating up in the generic-drug business, partly in response to consolidation taking place among distributors, which purchase the lower-priced copycat drugs for eventual sale to patients. U.S. regulators are also more heavily scrutinizing the industry’s manufacturing safety, increasing costs. And fewer big-name drugs are coming off patents, limiting growth opportunities.

In July, Teva Pharmaceutical Industries Ltd. agreed to acquire Allergan Plc’s generic business for $40.5 billion. Mylan NV is seeking to acquire Perrigo Co., an over-the-counter drug maker, in a $33 billion hostile bid.

Shares of Philadelphia-based Lannett jumped 20 percent to $56.70 in late trading after the deal was announced.

UCB is selling Kremers Urban as it focuses on immunology as well as drugs for illnesses of the central nervous system. A previous $1.53 billion agreement to sell the unit to buyout firms Advent International and Avista Capital Partners was terminated in December, after the U.S. Food and Drug Administration asked for further studies on its copy of Johnson & Johnson’s Concerta pill for ADHD.

The China Grand group, Cipla Ltd. and several others private-equity firms were among bidders for Kremers Urban this time around, people familiar with the matter said in July.

--With assistance from Cynthia Koons and Zachary Tracer in New York and Manuel Baigorri in London.

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