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King says Alpharma rebuffed a $1.4B buyout bid

King says Alpharma rebuffed a $1.4B buyout bid

King Pharmaceuticals Inc. said Friday that rival Alpharma Inc. has rejected a $1.4 billion buyout offer but indicated it is prepared to take the bid directly to shareholders in a move to expand its product offerings.
The Bristol, Tennessee-based drugmaker disclosed the $33 a share offer publicly for the first time on Friday. It said the offer was rejected by Alpharma, following a letter to that company's board of directors on Aug. 4.
"Having thoroughly reviewed all relevant aspects of King's proposal in consultation with its financial and legal advisors, ... Alpharma's board of directors has determined the non-binding proposal to be not in the best interests of Alpharma shareholders," the company said in a statement.
The bid amounts to a 37 percent premium over the $24.04 closing price of Alpharma's common stock on Thursday, but represents a 49 percent premium based on the Aug. 4 timeline.
"We continue to prefer to work together with you and your board to complete a negotiated transaction, and we are prepared to commit all necessary resources to do so," King Pharmaceuticals Chairman, President and Chief Executive Brian A. Markison said in a letter to Alpharma's President and CEO Dean J. Mitchell on Aug. 22. "If we are unable to negotiate a transaction, we are prepared to take this offer directly to your stockholders."
Alpharma shares surged $10.47, or 43.6 percent, to close at $34.51 Friday, suggesting the market considers Alpharma more valuable than King's offer.
In an interview Friday, Markinson said King views Alpharma's more dominant animal health products unit as fuel to help further build a promising pain products franchise and would allow it to continue operating as it has been.
"It adds a nice bit of diversification to King's portfolio at the end of the day," he said.
But the potential of Alpharma, he said, is in the pharmaceutical sector. And with King expecting to launch its newest pain drug in 2009, an Alpharma buyout would provide the necessary sales force.
King's key products include Avinza, which treats chronic pain and Skelaxin, a muscle relaxant. The drugs had sales of $653 million and $440 million, respectively in 2007, making up about half of the company's total revenue of $2.14 billion. It is currently developing Remoxy, an abuse-resistant pain killer, with Pain Therapeutics Inc. The intention is to make an alternative to oxycodone, which is abused by crushing the time-release drug or dissolving it in a liquid.
Alpharma received most of its revenue from animal health products. Still, the bulk of its pharmaceutical sales are related to the morphine painkiller Kadian, which reached $167.7 million in 2007. Another pain treatment, the Flector Patch, was launched in January.
King is the third pharmaceutical company in the past month to propose a billion-dollar unsolicited buyout. On July 21, Roche offered $43.7 billion to buy the remaining shares of its cancer drug partner and biotech giant, Genentech Inc. Switzerland-based Roche already owns a majority stake in the South San Francisco, California-based company. On July 31, New York-based Bristol-Myers Squibb Co. offered $4.5 billion to buy its cancer drug partner ImClone Systems Inc.
Both offers were unsolicited, and both were rejected as too low.
Shares of King Pharmaceuticals rose 95 cents, or 8.5 percent, to $12.19 Friday.


Updated : 2021-05-10 00:54 GMT+08:00