23 August 2008

KG: Intentions Now Clear

It was just two weeks ago, in our analysis of second quarter results, that we remarked that King Pharmaceuticals, Inc. (NYSE: KG):

We now have a better understanding of King's intentions.

King Pharmaceuticals formally announced a $1.4 billion, all-cash offer to purchase all the shares of Alpharma, Inc. (NYSE: ALO). Alpharma immediately rejected the $33 per share offer as inadequate, despite a substantial premium over prior market value. The offer had apparently been made privately and rebuffed by Alpharma before King's announcement on Friday. Alpharma's latest response indicated a willingness to enter into negotiations leading to a higher offer.

It seems likely that King's interest in Alpharma was piqued by the latter's KADIAN and FLECTOR products for treating acute pain. King and Pain Therapeutics, Inc. (NASDAQ: PTIE) recently presented test results for the proposed REMOXY product to treat chronic pain.

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