King Pharmaceuticals will buy out Alpharma

Alpharma Inc. has finally agreed to King Pharmaceuticals Inc.’s $1.6-billion cash takeover offer, ending the drug makers’ months-long battle.

On Monday, Bristol, Tenn.-based King said it agreed to pay $37 a share for Alpharma, representing a 54% premium to the Bridgewater, N.J., company’s stock price on Aug. 21, the last trading day before King’s initial $33-a-share bid.

After Alpharma rejected the original $1.4-billion offer, King raised its bid and said it would take the offer directly to shareholders.

Both companies’ boards have unanimously approved the deal. King’s tender offer, which had been scheduled to expire last Friday, was extended to Dec. 19. As of Friday, 73% of Alpharma shares had been tendered.

King expects the deal to close by the end of the year.

A key goal of the deal is to expand King’s pain drug franchise, which consists of the chronic pain treatment Avinza and the muscle relaxant Skelaxin. They made up about half of the company’s revenue in 2007.

Alpharma gets most of its revenue from animal health products, though the bulk of its pharmaceutical sales come from the morphine painkiller Kadian. It also launched the Flector Patch, a pain treatment, in January.

Meanwhile, King is developing the abuse-resistant pain drug Remoxy with partner Pain Therapeutics Inc. The majority of a Food and Drug Administration advisory panel recently recommended approval of that treatment in an informal vote.

Alpharma has a tamper-resistant morphine pill called Embeda under review by the FDA.

Alpharma shares rose $2.69, or 8%, to $36.19; King increased 68 cents, or 7.9%, to $9.30.