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Mylan to buy King for $4b in stock

PITTSBURGH -- One of the world's largest generic drug makers, Mylan Laboratories Inc., will buy King Pharmaceuticals Inc. for $4 billion in stock as Mylan makes a stronger foray into the branded drug market.

Mylan has pursued a stronger position with branded drugs for years and believes King can help it achieve that goal, company officials said yesterday.

"The significant expansion of our branded business advances our long-term strategy," said Robert J. Coury, Mylan's vice chairman and chief executive.

Bristol, Tenn.-based King, and Mylan, which is based in Canonsburg, a suburb of Pittsburgh, will create a company with combined annual revenues of about $3 billion and a workforce of 6,000 people.

Under terms of the agreement, King stockholders would get 0.9 Mylan common share for each outstanding share of King stock. That would give King shareholders stock worth $16.66 for each of their shares, based on Friday's closing price for Mylan shares. That represents a 60 percent premium over King's closing price on Friday.

On the New York Stock Exchange, King shares climbed $2.52, or 24 percent, to close at $12.89 Monday, while Mylan shares fell $3, or 16 percent, to $15.51.

King's flagship product is Altace, which is used for hypertension and cardiovascular protection. Altace had sales of about $446 million for the 12 months ended March 31.

Generic drug companies such as Mylan, Teva Pharmaceuticals, Forest Laboratories, and others have seen their sales surge as employers try to cut soaring healthcare costs

Yet many of those sales were driven by the expiration of patents on high-margin branded pharmaceuticals, which will slow considerably in the coming years as fewer patents expire.

Mylan and other generic companies are trying to smooth out that boom-bust cycle by filling their portfolios with branded drugs.

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