King Pharma follows unsolicited wave

August 22, 2008

King Pharmaceuticals Inc’s $1.4 billion offer to buy Alpharma Inc follows a wave of unsolicited bids in the otherwise weak merger market.

So far this year, there have been 50 unsolicited bids, totalling $137.3 billion worldwide, up from 19 deals totaling $30.2 billion for the same period a year ago, according to Thomson Reuters data.

The amount of unsolicited or hostile takeover bids has increased as weak stock prices have enticed large corporations that have the luxury of cash on their books or the ability to raise funding despite tight credit markets.

Other unsolicited offers this year included InBev NV’s successful battle for Budweiser brewer Anheuser-Busch Cos Inc, and Microsoft Corp’s abandoned effort to buy Yahoo Inc.

King warned it would make a hostile bid if Alpharma refused to accept its bid. King wants to expand its pain drug business through the acquisition of Alpharma, which makes the pain drug Kadian and pain patch Flector, as well as plus products to treat animals.

So far this year, there have been 9 hostile bids valued at $12 billion, compared with 6 bids valued at $102.2 billion at this point last year, according to Thomson Reuters.

It looks like King may have a battle ahead of itself as Alpharma said the offer was not in the best interest of its shareholders. The proposal was essentitally identical to two previous offers by King that Alpharma already rebuffed, Alpharma said.

Alpharma, however, said it would be open to discussions for a deal at a higher price. Analysts said Alpharma’s hint that it would consider more money puts the company in play for other suitors to emerge and potentially creates a costly bidding war for King.

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