Abbott planning to buy Alza Corp. for $7.3 billion

June 22, 1999|By BLOOMBERG NEWS

ABBOTT PARK, Ill. -- Abbott Laboratories, a top seller of antibiotics and ulcer drugs, said yesterday that it will buy Alza Corp., the No. 1 U.S. maker of sustained-release drugs, for $7.3 billion, adding new cancer and incontinence medicines.

Each Alza share is to be traded for 1.2 Abbott shares, or $53.03, based on Abbott's closing price of $44.1875, a 15 percent premium to Alza's closing price of $46.25 yesterday. Alza shares have soared 25 percent over the past week on expectations that the company would be acquired and were recently quoted at $48 in Instinet trading.

It is Abbott's first purchase of another company since Chief Executive Officer Miles White took on the additional title of chairman in April, promising to acquire new products to remain competitive in the pharmaceutical and health care industries.

It gives Abbott's sales force new products to promote and also brings royalties from drugs, such as SmithKline Beecham PLC's NicoDerm smoking-cessation patch, which Alza has licensed to drugmakers.

Abbott said it will take a one-time charge of about $100 million in 1999 and will restate earnings for the year after the deal closes. The purchase will reduce its 2000 profit by about 3 cents a share and will add to profit in 2001.

White, who was named CEO in September, formerly ran Abbott's medical-testing business. The company has replaced nearly all of its senior executives over the past year as it moves to boost sales in its most profitable businesses, which include drug making.

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