King Pharmaceuticals merging with Jones Pharma in $3.4 billion deal

King Pharmaceuticals is to buy specialty pharmaceuticals maker JonesPharma in a stock deal valued at around $3.4 billion. Under the terms of the agreement, stockholders of Jones will receive 1.125 shares of King common stock in exchange for their shares.

The companies said a break-up fee of $100 million will be paid if either firm terminates the deal. King claimed that it expects the acquisition, which will create an entity with a market capitalization of around $7.8 billion, to be accretive to earnings immediately upon closing, excluding merger-related charges. The firms say that the transaction is expected to be completed by the end of 2000.

About half of Jones' sales are generated by the thyroid-disorder drugs Levoxyl (levothyroxine), Tapazole (methinmazol), Triostat (liothyronine sodium injection) and Cytomel (liothyronine sodium tablets). Total revenues in 1999 reached $132.5 million, while the firm's net income was $48.9 million. Dennis Jones, the company's chief executive, said that a merger with King "provides us with a 45% stake in a fully integrated specialty pharmaceutical company with a promising R&D pipeline and an outstanding marketing capability."