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King Pharmaceuticals Acquires Alpharma

Mon, 11/24/2008 - 8:18am
Associated Press

NEW YORK (AP) - Alpharma Inc. has finally agreed to King Pharmaceuticals Inc.'s $1.6 billion cash takeover offer, ending the drugmakers' months-long battle.

On Monday, Bristol, Tenn.-based King said it agreed to pay $37 per share for Alpharma, representing a 54 percent premium to the Bridgewater, N.J.-based company's closing stock price on Aug. 21, the last trading day before King's initial $33-per-share bid.

After Alpharma rejected the original $1.4 billion offer, King raised its bid and said it would take the offer directly to shareholders.

Both companies' boards have unanimously approved the deal. King's tender offer, which had been scheduled to expire Nov. 21, is now extended to Dec. 19. As of last Friday, 73 percent of Alpharma shares had been tendered.

King expects the deal to close by the end of the year, adding to adjusted earnings and saving between $50 million and $70 million in costs in the second full year after closing.

A key goal of the deal is to expand King's pain drug franchise, which consists of the chronic pain treatment Avinza and the muscle relaxant Skelaxin. They made up about half of the company's revenue in 2007.

‘The number one thing we want to do is start integrating these companies,’ King Chief Executive Brian A. Markison said.

Alpharma gets most of its revenue from animal health products, though the bulk of its pharmaceutical sales come from the morphine painkiller Kadian. It also launched the Flector Patch, a pain treatment, in January.

Meanwhile, King is developing the abuse-resistant pain drug Remoxy with partner Pain Therapeutics Inc. The majority of a Food and Drug Administration advisory panel recently recommended approval of that treatment in an informal vote.

Alpharma has a tamper-resistant morphine pill called Embeda under review by the FDA. An FDA advisory panel said earlier this month that the drug seemed to offer some advantages over existing medications.

‘What we're all about doing here is maximizing the success of both launches,’ Markison said.

The FDA doesn't have to follow the opinions of its advisory panels, which recommend approval of both drugs in this case, but it often does.

Alpharma, meanwhile, said it spent the last two years building up shareholder value and it has been acting in the best interest of stockholders.

‘After careful evaluation, our board determined that a combination with King is in the best interest of our shareholders and provides them immediate access to this value,’ Alpharma President and Chief Executive Dean Mitchell, said in a statement.

Credit Suisse and Wachovia Securities are acting as financial advisers and Dewey & LeBoeuf LLP as legal counsel to King. Banc of America Securities LLC and is acting as financial adviser and Simpson Thacher & Bartlett LLP as legal counsel for Alpharma.

Alpharma shares rose $2.05, or 6.1 percent, to $35.55 in afternoon trading. King shares rose 71 cents, or 8.2 percent, to $9.33.

Release Date: November 24, 2008

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