(By Mayur Pahilajani - iStockAnalyst Writer)
New York, NY - Shares of King Pharmaceuticals, Inc. (NYSE: KG) jumped on Monday after its renewed takeover bid of $1.6 billion in an all-cash deal was accepted by Alpharma Inc. (NYSE: ALO) on Monday, ending months long acquisition fight.
Bristol, Tennessee-based King said that the two companies have signed a definitive merger agreement, which was approved by both the boards, under which King will acquire all of the outstanding shares of Class A shares of Alpharma for $37.00 per share in cash.
“The transformation of Alpharma over the past two years has created tremendous shareholder value, and we have consistently said that we will act in the best interest of shareholders,” Alpharma’s President and Chief Executive Officer Dean Mitchell said in a statement on Monday.
He added, “We believe the combined company has a compelling strategic logic and will create a strong company for both shareholders and employees. We look forward to working with King’s team to integrate our companies.”
The initial offer made by King was $33 per share or $1.4 billion in the month of August, which was rejected by the pain-drug maker Alpharma as the acquisition bid undervalued the company's market value.
King Pharmaceuticals said in the statement that the tender for takeover offer, which was scheduled to expire on Nov. 21, will be extended until Dec. 19.
Around 73 percent of the shares or 30.7 million shares of Bridgewater, New Jersey-based Alpharma were had been tendered by the initial expiration date.
“We are excited about the combination of King and Alpharma, which will create a leading specialty pharmaceutical company with greater scale and capabilities,” King's Chairman, President and Chief Executive Officer Brian A. Markison said in the statement. “Together, we will be better positioned to deliver superior value to our stockholders and significant benefits to employees of both companies."
The takeover would provide access to Alpharma’s Animal Health division, which will raise the diversification of King’s business. In addition, the combination is expected to bolster King's commercialization capabilities to launch products, such as Remoxy and Embeda. Remoxy and Embeda are painkillers that are designed to resist or deter common methods of opioid misuse and abuse.
King currently anticipates that the transaction will be completed by the end of 2008. Credit Suisse and Wachovia Securities are acting as financial advisors to King and Banc of America Securities LLC is acting as financial advisor for Alpharma.
Shares of the King Pharmaceuticals were trading up by 55 cents or 6.38 percent to $9.17, after hitting a high of $9.45 so far into the day. The Alpharma stock was moving up by $2.03 or 6.06 percent to $35.53, with a high of $$35.80 so far, in composite trading on the New York Stock Exchange on Monday.
