Two big deals hit the papers today: King Pharmaceuticals is taking over Alpharma, and Johnson & Johnson has inked an agreement to buy Omrix. Together they amount to more than $2 billion in buyouts.
Let's take King's $1.6 billion deal first. As you know, the Tennessee company has been after Alpharma for several months, first with a $33-per-share offer and then, rebuffed, a $37-a-share bid. Alpharma wasn't thrilled about the higher offer, either, but shareholders tendered 73 percent of the outstanding stock anyway. King had threatened a proxy fight, but Alpharma finally gave in, saying it would support King's offer. The deal is expected to close by year's end.
Advantages to the King-Alpharma combo? Well, King thinks it can achieve some synergies and economies of scale by combining R&D and sales forces. Will we see an accompanying layoff of reps soon, then? Could be. We'll keep our eyes open.
And then there's J&J's $438 million purchase of Omrix Biopharmaceuticals. The deal adds more heft to J&J's surgical products unit Ethicon, which will take Omrix under its wing. The smaller company will continue to operate as a standalone unit, though. The $25-per-share purchase price is an 18 percent premium over Friday's $21 closing price for Omrix.
The J&J-Omrix combo marks another instance of one partner buying out another: J&J already has some distribution rights to Omrix's Evithrom and Evicel, and the two companies are working together on development of another surgical product.