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Jul 16, 2007

King Enters Asset Purchase Agreement with JHP Pharmaceuticals Worth $90M

  • JHP Pharmaceuticals is acquiring King Pharmaceuticals’ Rochester, MI sterile manufacturing facility, 12 products manufactured there, and the related contract manufacturing business for approximately $90 million.

    King says that the current total net book value of the assets that are the subject of this transaction, including inventory, is approximately $151 million. Accordingly, King expects to incur a special charge of approximately $60 million on closing the transaction. The company says that it incurred a net operating loss of approximately $1 million with respect to these assets in 2006.

    The companies also entered a manufacturing and supply agreement pursuant to which JHP will provide certain fill-and-finish support with respect to King's hemostatic product, Thrombin-JMI®.

    "This transaction represents the continued successful execution of our strategy for long-term growth, particularly with respect to the realization of greater operating efficiency for our company,” states Eric J. Bruce, chief technical operations officer of King. “Importantly, this transaction will enable us to redeploy our current investments in these assets to our ongoing R&D and business development initiatives."

    Peter Jenkins, co-founder of JHP, adds, "The acquired products will provide immediate critical mass in our target hospitals and clinic market, and we are confident in the opportunity to build the contract manufacturing business at Rochester."

    The companies expect to close the transaction during the third quarter of 2007. Net sales in 2006 for the products that will be acquired totaled approximately $51 million, and net revenue from contract manufacturing totaled approximately $14 million during 2006, according to King.



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