MYLAN SAYS ACQUISITION OF KING 'UNLIKELY'
Mylan Pharmaceuticals has confirmed that its proposed $4 billion acquisition of brand firm King Pharmaceuticals is in jeopardy.
The high-profile merger, first announced in July 2004, will likely be terminated by Mylan because of King's announcement last month that it would restate its earnings results for 2002, 2003 and the first six months of 2004.
King's earnings restatement violated the merger agreement between the companies and triggered an escape clause that allows Mylan to back out of the deal without paying an $85 million termination penalty.
"While we are monitoring and reviewing these accounting issues and a number of other matters concerning King, in light of timing issues, we believe that it is highly unlikely that the parties would be able to consummate the merger contemplated by our merger agreement with King by February 28, 2005," Mylan's Vice Chairman and CEO Robert Coury said in a statement.
The restatement increased King's net sales and net income for the first nine months of 2004 by $54.3 million and $36.5 million, respectively. The adjustment, however, also decreased net sales and net income for prior periods by approximately the same amounts. Additionally, net sales and net income for 2003 reflected a $16.5 million and a $13.9 million decrease, respectively.