Abbott and Kos Pharmaceuticals, Inc. have signed a definitive agreement for Abbott to acquire Kos for $78 per share in cash, for a total transaction value of $3.7 billion, net of cash currently held by Kos.
Based in Cranbury, New Jersey. Kos is a specialty pharmaceutical company that develops and markets proprietary medications for the treatment of chronic cardiovascular, metabolic and respiratory diseases. The company has a growing presence in the $20 billion lipid management market.
Under the terms of the agreement, Abbott will make a tender offer for all of the outstanding stock of Kos Pharmaceuticals for $78 per share or $3.7 billion, net of cash currently held by Kos. Abbott expects the transaction to be $0.02 to $0.03 dilutive to ongoing earnings per share in 2007, neutral to accretive in 2008 and building to significant accretion thereafter. Following the closing, the transaction is expected to result in one-time charges, primarily for in-process research and development and integration expenses.
The transaction is structured as a tender offer for all outstanding shares of Kos Pharmaceuticals followed by a merger. The transaction is subject to customary closing conditions, including antitrust clearance under the Hart-Scott Rodino Act and acquisition of a majority of the outstanding Kos Pharmaceuticals shares in the tender offer. Shareholders owning a majority of the shares of Kos Pharmaceuticals' common stock have entered into agreements under which they agreed to tender their shares or have their shares acquired by Abbott.
"Kos is an excellent strategic fit for Abbott, both scientifically and commercially," said Miles D. White, chairman and chief executive officer, Abbott. "This acquisition expands Abbott's presence in the lipid management market and will provide several on-market and late-stage pipeline products. Kos also complements our existing commercial and research and development expertise, and increases our R&D spending capacity."
"Since being founded in 1988 by our current Chairman Emeritus Michael Jaharis and chairman Daniel Bell, Kos has pioneered the HDL therapy area in the US and firmly established Niaspan and Advicor as successful and highly differentiated therapies," said Adrian Adams, president and chief executive officer, Kos Pharmaceuticals. "This is an opportune time to become a part of another fast-growing organization like Abbott with the shared experience and additional resources to help capture the full value of our highly differentiated cholesterol franchise and our growing R&D pipeline."
The lipid management market is the single largest pharmaceutical segment and continues to grow at double-digit rates. Kos Pharmaceuticals' two lead products are Niaspan (niacin extended-release tablets), an extended-release niacin product that raises HDL, or good cholesterol levels; and Advicor (niacin extended-release/ lovastatin tablets), a Niaspan/lovastatin combination product that treats patients with multiple lipid disorders.
A new Niaspan Caplet Formulation with a range of dosages is currently under US Food and Drug Administration review. Kos is also in late-stage development with Simcor, a fixed-dose combination of Niaspan and simvastatin (generic Zocor) to treat lipid disorders, which is expected to be submitted for regulatory review in the US in the first half of 2007. These on-market cholesterol products and development opportunities will join Abbott's lipid management portfolio, which includes on-market TriCor (fenofibrate tablets); a next-generation fenofibrate, ABT-335; and a TriCor/Crestor development program with AstraZeneca announced in July 2006.