Abbott Laboratories, a top seller of antibiotics and ulcer drugs, said it will buy Alza Corp., the No. 1 U.S. maker of NicoDerm and other sustained-release drugs, for $7.3 billion.
Each Alza share will be traded for 1.2 Abbott shares, or $53.02 1/2 based on Abbott's closing price today of $44.18 3/4. That's a 15 percent premium over Alza's closing price of $46.25.
The purchase will allow Abbott to arm its sales force with new products, including treatments for cancer and urology problems. When Abbott chief executive Miles White took on the additional title of chairman in April, he promised to acquire new products to remain competitive in the pharmaceutical and health-care industries.
Abbott said it would restate its 1999 earnings after the acquisition closes. The purchase will reduce its 2000 profit by about 3 cents a share and will add to its profit in 2001.
The purchase is the latest in a series of deals engineered by White since September, when he was promoted to CEO from a position running Abbott's medical testing business. The company has replaced nearly all of its senior executives over the past year as it has moved to boost sales in its most profitable businesses, which include drugmaking.
Abbott's products range from infant formula to AIDS medicines and medical testing equipment.
Earlier this month, Abbott said it would spend up to $335 million as part of an agreement to market HIV and hepatitis B medicines with Triangle Pharmaceutical Inc. The deal also calls for Abbott to acquire 17 percent of Triangle.
In May, Abbott said it would team up with SangStat Medical Corp. to sell drugs designed to prevent rejection of transplanted organs.
Alza reported progress in development of several cancer drugs over the past month and launched a direct-to-consumer advertising campaign for its new incontinence pill, Ditropan XL.
The company late last month submitted an application to the Food and Drug Administration to market Viadur, a treatment for prostate cancer that works by suppressing testosterone production and can be taken just once a year.
Alza, which is based in Palo Alto, Calif., receives royalties on a series of products that it developed and licensed to other drugmakers. Those products include the NicoDerm CQ patch, which is sold by SmithKline Beecham Plc; Johnson & Johnson's Duragesic patch for pain relief; and Pfizer Inc.'s heart drug Procardia XL.