Pfizer To Acquire King Pharmaceuticals For 3.6 Billion Dollars

Drug manufacturer Pfizer Inc. (PFE) has agreed to purchase King Pharmaceuticals Inc. (KG) for 3.6 billion dollars, a move that can limit the damage as the company's popular cholesterol medicine Lipitor is expected to lose its market exclusivity next year.

Pfizer believes that the proposed deal will expand its animal health and painkiller businesses, while providing the company with an opportunity to enjoy cost savings.

King's shares rose by 34.9 percent on Tuesday to 14.15 dollars whereas Pfizer’s shares dipped three cents to 17.35 dollars.
 
The deal comes almost a year after Pfizer, the world's largest drug manufacturer in terms of sales, bought Wyeth for 68 billion dollars. The deal with Wyeth allowed Pfizer to diversify its business and generate cost savings. Pfizer subsequently said that it would go for additional, smaller partnerships to ensure its financial objectives for 2012 are met.  

Frank D'Amelio, Pfizer's Chief Financial Officer, told analysts on Tuesday, "We believe the transaction is attractive to shareholders".

Pfizer executives believe that the deal will allow the company's sales staff to market both Pfizer and King pain products including Celebrex and Lyrica.

Pfizer is expecting the deal with King to add around 2 cents per share to the company's adjusted earnings in 2011 and 2012, in addition to adding 3 to 4 cents per share every year between 2013 and 2015. The deal is expected to be finalized by early next year.

Pfizer estimates that it would be able to achieve minimum savings of 200 million dollars annually by late 2013.