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Alpharma Approves King Purchase


Pharmaceutical Executive

Pharmaceutical ExecutivePharmaceutical Executive-11-26-2008
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After months of negotiations and veiled threats, Alpharma's board of directors has sealed the deal with King Pharmaceuticals. Alpharma is now $1.6 billion richer, and King gets access to a handful of new pain treatments.

After months of negotiations and a couple of offer rejections, King Pharmaceuticals has secured purchase of Alpharma for $1.6 billion, or $37 per share.

In August, Alpharma President and CEO Dean J. Mitchell scoffed at King’s initial offer of $33 per share, stating that it did not reflect Alpharma’s true value. King followed by boosting the bid price and threatening to replace Alpharma board members with its own appointments if Alpharma were to continue to reject its advances.

The tone on Monday, however, was more pleasant. “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 interests of shareholders,” Mitchell stated in a release. “Our board determined that a combination with King is in the best interests of our shareholders, and provides them immediate access to this value. We look forward to working with King’s team to integrate our companies.”

King is now in possession of Alpharma’s key pain drug Kadian, as well as a topical patch called Flector. Prior to the arrival of Mitchell, two years ago, Alpharma was a generics company. After the generics arm was sold off, the management team transformed the company into a specialty pharmaceutical firm with a focus on pain medication.

“We think Alpharma shareholders got a fair deal, as the purchase price represents a 23 percent control premium to our fair value estimate,” Morningstar’s Brian Laegeler said in an analyst statement. “The transaction is a necessary one for King, which has major patent expirations within its own portfolio, [and] Alpharma's pain-management portfolio complements Remoxy, King's lead candidate for pain.”

King said that it expects to save between $50 million and $70 million in general and administration, R&D, and sales force costs for the launch of Remoxy.

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