Mylan Laboratories to Acquire King Pharmaceuticals for 2.65 Times Revenue

Weekly Corporate Growth Report, Aug 2, 2004

The Deal: Mylan Laboratories Inc. has agreed to purchase King Pharmaceuticals in a deal valued at approximately $4 billion. Under the terms of the agreement, each share of King Pharmaceuticals will be exchanged for 0.9 common shares of Mylan Laboratories. Based on recent closing prices, the deal values King at $16.70 per share. After the transaction closes, current Mylan shareholders will own about 56 percent of the combined company's outstanding shares while current King shareholders will own the remaining 44 percent. The deal is expected to close by the end of 2004.

Discussion: King Pharmaceuticals produces both generic and brand-name drugs. The company's leading products include Altace, a cardiovascular treatment, and Levoxyl, a thyroid disorder drug. The company markets to physicians and health care facilities through its Monarch Pharmaceuticals subsidiary.

Mylan Laboratories is the second largest generic-drug company in the world and one of the largest manufacturers of prescription generic drugs in the United States. Company products include antibiotics, antidepressants, anti-inflammatories, beta-blockers, and laxatives. The company also develops and sells branded drugs through its subsidiaries, Bertek Pharmaceuticals and Mylan Tech.

The acquisition will give Mylan access to the more profitable branded drug market.