NEW YORK (CNN/Money) -
Mylan Laboratories said Monday it agreed to acquire troubled drugmaker King Pharmaceuticals Inc. for about $4 billion, adding patent-protected brand drugs to Mylan's generic-drug offerings.
Under the terms of the deal, King shareholders will get 0.9 Mylan share for each King share held. Based on Friday's closing prices, that represents about $16.66 in Mylan stock for each King share. That represents a 61 percent premium.
Shares of Mylan (MYL: Research, Estimates) fell 31 cents to $18.51 in trading Friday, while King (KG: Research, Estimates) lost 10 cents to $10.37. Shares of King rose to $14.90 in pre-market trade on INET.
The sales force King uses to market its top-selling drug, Altace for blood pressure, could help Mylan sell its new hypertension medicine, nebivolol, if it is approved by the Food and Drug Administration.
King shares are trading near a 15-month low, and are well off a July 2001 high of $46.05, in part because of a Securities and Exchange Commission investigation into King's pricing practices and flagging demand for some of its top drugs, namely Altace for blood pressure and Levoxyl for thyroid disorder.
In May, King reported quarterly earnings that badly missed analysts' expectations and said its earnings for the year would be lower than expected, as overstocked wholesalers reduced purchases of its drugs.
The companies said they are not giving earnings guidance any longer, but that based on Mylan's and King's earnings, excluding King's special items, for the 12 months ended March 31, 2004, the acquisition would have added 15 percent to earnings per share.
Separately, Mylan reported essentially flat fiscal firs- quarter earnings. The company earned net income of $82 million, or 30 cents a share, in the quarter ended June 30, compared to $83.9 million, or 30 cents a share, a year earlier.
Analysts surveyed by earnings tracker First Call had forecast EPS of 30 cents. Net gains on legal settlements added 6 cents a share to the most recent quarter results and 5 cents a share to the year-earlier earnings.
-- Reuters contributed to this report
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