$4 Billion Mylan, King Merger Terminated

Mylan Laboratories has officially closed the door on its planned merger with King Pharmaceuticals, announcing that it is not moving forward with the $4 billion deal.

The high-profile merger, first announced in July 2004, has been on the rocks since early January, when Mylan said the deal would likely be terminated because King restated its earnings results for 2002, 2003 and the first six months of 2004 after the deal was signed. King's earnings restatement violated the merger agreement between the companies, triggering an escape clause that allowed Mylan to back out of the deal without paying an $85 million termination penalty.

The original merger agreement called for Mylan to purchase King in a stock swap valued at $4 billion. The deal was widely criticized by two of Mylan's most prominent shareholders, both of whom publicly questioned whether the deal was a sound financial move. UBS Global Asset Management, which is Mylan's second-largest shareholder with 10.5 million shares, told Mylan Chairman Milan Puskar in October 2004 that the proposed merger was not in the best interest of shareholders.

The acquisition was also panned by Mylan's largest shareholder, financier Carl Icahn. In a Dec. 17, 2004, letter addressed to Mylan's shareholders, Icahn said he "strongly opposed" the deal and questioned the future strength of King's product portfolio.