King Pharmaceuticals, Inc and Alpharma Inc announced that the two companies have signed a definitive merger agreement under which King will acquire all of the outstanding shares of Class A Common Stock of Alpharma for $37.00 per share in cash for a total equity value of approximately $1.6 billion. The Boards of Directors of both companies have unanimously approved the transaction.
Under the terms of the merger agreement, King's tender offer for all of the outstanding shares of Class A Common Stock of Alpharma has been extended and will remain open till 5:00 pm, New York City time, on Friday, December 19, 2008, unless further extended in accordance with the merger agreement. The terms and conditions of King's amended offer will be described in amended offer documents, which will be filed with the Securities and Exchange Commission (SEC) and mailed to Alpharma stockholders. Alpharma's Board recommends that Alpharma stockholders tender their shares into King's amended offer.
As of the close of business on November 21, 2008, by King's estimate, approximately 30,713,179 shares of Class A Common Stock of Alpharma (including approximately 1,963,583 shares subject to guarantees of delivery), representing approximately 73 per cent of all outstanding shares, were validly tendered and not withdrawn pursuant to the tender offer.
"We are excited about the combination of King and Alpharma, which will create a leading specialty pharmaceutical company with greater scale and capabilities," stated Brian A Markison, chairman, president and chief executive officer of King. "Together, we will be better positioned to deliver superior value to our stockholders and significant benefits to employees of both companies. In addition, the transaction will create a stronger platform to deliver innovation to our customers. King and Alpharma are highly complementary and we look forward to even greater success as a combined company."
"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," commented Dean Mitchell, Alpharma's president and chief executive officer. "Therefore, 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. 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."
King noted that Alpharma's Animal Health division will increase the diversification of King's business and is expected to provide steady cash flow to fuel future strategic initiatives, much like its Meridian auto-injector franchise. Additionally, King believes the strong commercialization capabilities that this combination provides will enhance the anticipated launches of Remoxy (long-acting oral oxycodone) and Embeda (morphine sulfate extended-release with sequestered naltrexone hydrochloride), both of which are designed to resist or deter common methods of opioid misuse and abuse. Commercialization of these products, together with other new medicines expected to emerge from the pipeline, will further advance King's ability to deliver outstanding stockholder value.
King expects the transaction will be accretive to its diluted earnings per share, excluding any special items, in the second full year following completion of the transaction and anticipates achieving synergies of $50 million to $70 million over the same time period. King expects that these synergies will be derived principally from G&A, R&D, and savings to be achieved by avoiding the expense of hiring additional sales representatives for the anticipated launch of Remoxy.
King currently anticipates that the transaction will be completed by the end of 2008. However, King's amended offer is subject to the satisfaction of customary conditions contained in the merger agreement, which also will be described in the amended tender offer documents to be filed with the SEC and mailed to Alpharma stockholders.
Credit Suisse and Wachovia Securities are acting as financial advisors, and Dewey & LeBoeuf LLP is acting as legal counsel, to King. Banc of America Securities LLC and Simpson Thacher & Bartlett LLP are acting as financial advisor and legal counsel for Alpharma, respectively.
Remoxy, an investigational drug, is a unique, abuse-resistant, controlled-release oxycodone for moderate-to-severe chronic pain. Remoxy's high viscosity, liquid formulation in a hard gelatin capsule is designed to resist common methods of prescription drug misuse and abuse.
Alpharma is a global specialty pharmaceutical company with leadership positions in products for humans and animals. Alpharma is presently active in more than 80 countries. Alpharma has a growing branded pharmaceutical franchise in the U.S. Alpharma is also internationally recognized as a leading provider of pharmaceutical products for poultry and livestock.