ELN now over $3...King Pharm (KG) downgraded~Risk of pending Elan product acquisitions?
comments from 4-16-03 Smith Barney report and downgrade of King Pharma (KG)
Risk of pending Elan product acquisitions?
In late January (1/30/03), King announced an agreement to acquire Elan's U.S. and Puerto Rico primary care product business unit, which consist of 2 products, Sonata (insomnia) and Skelaxin (muscle relaxer), along with Elan's primary care sales force of approximately 400 sales representatives. The
agreement also includes licenses to certain patents associated with potential new formulations of the products. However, on 3/14/03, the FTC announced that it was investigating if any unfair methods of competition with respect to Skelaxin. King announced on 4/2/03 that it did not plan to continue with the acquisition. Elan sued King to compel the deal closure and now the companies are slated to go to court on May 15, 2003.
If King is able to walk away from the deal 100% we believe King really loses nothing. However, there may be a risk that the court rules that a "damages" type fee should be paid or the deal must be completed. We lean toward believing a limited monetary settlement can be found with the courts intervention, but this is a legal outcome event with obvious uncertainty as to the outcome.
------------------------------------------
"When you look at things differently,
things look different"
--Wayne Dyer--
