Pfizer Inc. and King Pharmaceuticals, Inc. have announced that they have entered into a definitive merger agreement. Under the terms of the agreement, Pfizer will acquire King, a diversified specialty pharmaceutical discovery and clinical development company, for US$3.6 billion in cash, or $14.25 per share, which represents a premium of approximately 40 per cent to King's closing price as of 11 October 2010, and 46 per cent to the one-month average closing price as of the same date. The transaction was approved by the boards of both companies and is expected to be accretive to Pfizer's adjusted diluted earnings per share(1) by approximately $0.02 annually in 2011 and 2012, and approximately $0.03 to $0.04 annually from 2013 through 2015.

The transaction will further expand Pfizer's business profile, providing immediate, incremental diversified revenues generated by King's portfolio, including a prescription pharmaceutical business focused on delivering new formulations of pain treatments designed to discourage common methods of misuse and abuse, the Meridian auto-injector business for emergency drug delivery, which develops and manufactures the EpiPen® and is a long-term, critical supplier to the US Department of Defense, and an animal health business that offers a variety of feed additive products for a wide range of species. King's three key businesses are not only complementary to Pfizer's businesses, but are also strategically aligned with Pfizer's Primary Care, Established Products and Animal Health business units, enabling a seamless combination that will maximize King's assets with Pfizer's global organisation's scale and resources.

This strategic combination will allow Pfizer to leverage its existing commercial capabilities and expertise to create one of the leading broad portfolios for pain relief and management in the biopharmaceutical industry, offering both currently marketed opioid and non-opioid products, as well as a pipeline spanning stages of clinical development. In addition to Pfizer's current treatments for pain – which include Lyrica and Celebrex – King will bring Avinza, the Flector Patch and the recently launched Embeda, the first approved opioid pain product with design features intended to discourage misuse and abuse, two compounds in registration, which have the potential to lower the risk of abuse, as well as other compounds in development.

Jeffrey Kindler, Pfizer's chairman and chief executive officer, commented: "We are highly impressed by King’s innovative products and technology in the pain relief disease area, as well as by its success in advancing promising compounds in its pipeline. The combination of our respective portfolios in this area of unmet medical need is highly complementary and will allow us to offer a fuller spectrum of treatments for patients across the globe who are in need of pain relief and management. In addition, the revenue generated by King's portfolio will further diversify Pfizer's business, while at the same time contributing to steady earnings growth and shareholder value."

Brian Markison, chairman and chief executive officer of King, said: "By bringing together King's capabilities in new formulations of pain treatments, designed to discourage common methods of misuse and abuse, with Pfizer’s commercial, medical and regulatory expertise, global strength in patient services and reimbursement and global scale and resources, we believe Pfizer can build on our foundation and take our business to the next level."

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