Pfizer Inc. agreed to pay $3.6 billion in cash to buy King Pharmaceuticals Inc., expanding its range of pain treatments to include tamper-resistant medicines.
Pfizer, the world’s largest drugmaker, will pay $14.25 a share, a premium of 40 percent over King’s closing share price yesterday, the New York-based company said today in a statement. The purchase will close by the first quarter of 2011.
The deal would be Pfizer’s biggest since its $68 billion purchase of Wyeth last year. King gives Pfizer access to the Flector pain patch and abuse-resistant pain treatment Embeda. Pfizer has said it is looking to expand its pain products beyond the arthritis treatment Celebrex and nerve pain remedy Lyrica. King had $1.78 billion in revenue last year and is focused on making pain medications that patients can’t overuse.
“We view King as a solid asset at a somewhat elevated price for Pfizer,” said Joel Levington, managing director with Brookfield Investment Management Inc., said in an email. “The transaction should modestly help Pfizer’s growth profile in 2012 through 2013, and we do not see the deal having an impact on the company’s strong creditworthiness.”
King surged $3.98, or 39 percent, to $14.13 as of 9:14 a.m. in early New York Stock Exchange trading. The shares had declined 17 percent since Jan. 1 as the Bristol, Tennessee-based company faced competition from generic copies of Skelaxin, its top-seller last year.
Pfizer shares rose 11 cents to $17.49.
King Shares
King hasn’t closed at $14.25 since September 2007, according to data compiled by Bloomberg. The company also makes Thrombin-JMI to control bleeding during surgery and Levoxyl for thyroid disorders.
Pfizer needs new products to help offset the losses expected next year when generic copies of its top-selling drug, the Lipitor cholesterol pill, enter the market. Lipitor had $11.4 billion in revenue last year.
King has been focused on developing new painkillers since its top-selling blood-pressure pill Altace went generic in 2007. The company acquired Alpharma Inc. the following year for about $1.3 billion to gain rights to Embeda, a morphine pill designed to deter abuse. Embeda was approved by the U.S. Food and Drug Administration in August 2009.
Tamper-Resistant Remoxy
King is also developing Remoxy, a long-acting oxycodone capsule with tamper-resistant features, with Pain Therapeutics Inc., of San Mateo, California. The drug is designed to be a safer alternative to OxyContin, made by Stamford, Connecticut- based Purdue Pharma LP. King’s short-acting oxycodone pill, called Acurox, is partnered with Palatine, Illinois-based Acura Pharmaceuticals Inc. and failed to win an FDA panel’s backing in April.
“We are highly impressed by King’s innovative products and technology in the pain relief disease area, as well as by its success in advancing promising compounds in its pipeline,” said Pfizer Chief Executive Officer Jeffrey Kindler in the statement. “The combination of our respective portfolios in this area of unmet medical need is highly complementary and will allow us to offer a fuller spectrum of treatments for patients across the globe who are in need of pain relief and management.”
Pfizer has done 30 deals in the past five years with an average size of $4.13 billion. The average premium paid for pharmaceutical acquisitions over the past 12 months was 24 percent, according to data compiled by Bloomberg.
Pfizer’s financial adviser was J.P. Morgan Securities LLC and its legal advisor was Cadwalader, Wickersham & Taft LLP. Credit Suisse was King’s financial advisor and Covington & Burling LLP was its legal advisor.
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The deal would be Pfizer’s biggest since its $68 billion purchase of Wyeth last year. King gives Pfizer access to the Flector pain patch and abuse-resistant pain treatment Embeda. Pfizer has said it is looking to expand its pain products beyond the arthritis treatment Celebrex and nerve pain remedy Lyrica. King had $1.78 billion in revenue last year and is focused on making pain medications that patients can’t overuse.
“We view King as a solid asset at a somewhat elevated price for Pfizer,” said Joel Levington, managing director with Brookfield Investment Management Inc., said in an email. “The transaction should modestly help Pfizer’s growth profile in 2012 through 2013, and we do not see the deal having an impact on the company’s strong creditworthiness.”
King surged $3.98, or 39 percent, to $14.13 as of 9:14 a.m. in early New York Stock Exchange trading. The shares had declined 17 percent since Jan. 1 as the Bristol, Tennessee-based company faced competition from generic copies of Skelaxin, its top-seller last year.
Pfizer shares rose 11 cents to $17.49.
King Shares
King hasn’t closed at $14.25 since September 2007, according to data compiled by Bloomberg. The company also makes Thrombin-JMI to control bleeding during surgery and Levoxyl for thyroid disorders.
Pfizer needs new products to help offset the losses expected next year when generic copies of its top-selling drug, the Lipitor cholesterol pill, enter the market. Lipitor had $11.4 billion in revenue last year.
King has been focused on developing new painkillers since its top-selling blood-pressure pill Altace went generic in 2007. The company acquired Alpharma Inc. the following year for about $1.3 billion to gain rights to Embeda, a morphine pill designed to deter abuse. Embeda was approved by the U.S. Food and Drug Administration in August 2009.
Tamper-Resistant Remoxy
King is also developing Remoxy, a long-acting oxycodone capsule with tamper-resistant features, with Pain Therapeutics Inc., of San Mateo, California. The drug is designed to be a safer alternative to OxyContin, made by Stamford, Connecticut- based Purdue Pharma LP. King’s short-acting oxycodone pill, called Acurox, is partnered with Palatine, Illinois-based Acura Pharmaceuticals Inc. and failed to win an FDA panel’s backing in April.
“We are highly impressed by King’s innovative products and technology in the pain relief disease area, as well as by its success in advancing promising compounds in its pipeline,” said Pfizer Chief Executive Officer Jeffrey Kindler in the statement. “The combination of our respective portfolios in this area of unmet medical need is highly complementary and will allow us to offer a fuller spectrum of treatments for patients across the globe who are in need of pain relief and management.”
Pfizer has done 30 deals in the past five years with an average size of $4.13 billion. The average premium paid for pharmaceutical acquisitions over the past 12 months was 24 percent, according to data compiled by Bloomberg.
Pfizer’s financial adviser was J.P. Morgan Securities LLC and its legal advisor was Cadwalader, Wickersham & Taft LLP. Credit Suisse was King’s financial advisor and Covington & Burling LLP was its legal advisor.
http://jodnet.blogspot.com
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