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King Pharmaceuticals Launches Hostile Bid For Alpharma

Drug developer launched its tender offer for rival Alpharma Inc. on Friday, taking its offer directly to shareholders after raising its bid 12 percent to $1.6 billion.

BRISTOL, Tenn. (AP) -- Drug developer King Pharmaceuticals Inc. launched its tender offer for rival Alpharma Inc. on Friday, taking its offer directly to shareholders after raising its bid 12 percent to $1.6 billion.

King said its offer of $37 per share will expire Oct. 10. The would-be buyer said it could advocate replacing Alpharma's board members with its own nominees to facilitate the buyout.

King's management reiterated that its offer represents a 54 percent premium over Alpharma's closing price on Aug. 21, the day before public disclosure of the initial buyout offer. That offer had been rejected by Bridgewater, N.J.-based Alpharma, which said it would adopt a shareholder rights plan, also known as a poison pill, to head off a hostile takeover bid.

In a statement Thursday, Alpharma urged shareholders not to take action on King's tender offer until its board makes a formal recommendation within 10 business days following consultation with advisers.

Despite the tough posture assumed by both companies, several analysts agreed Thursday they will likely be forced to negotiate a final deal.

Cowen and Co. analyst Ian Sanderson reaffirmed a "Neutral" rating on Alpharma and said plans to buy the company by the end of 2008 would be difficult without a negotiated deal. Roth Capital Partners analyst Scott Henry also reaffirmed a "Hold" rating on Alpharma, also saying the most likely outcome of the tussling between each company is a negotiated deal.

Shares of King Pharmaceuticals rose 3 cents Friday morning to $10.80, while Alpharma Inc. rose 37 cents to a new high of $37.75.

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