It is “highly unlikely” that Mylan Laboratories’ proposed $4 billion dollar purchase of King Pharmaceuticals will go through at the current price and terms by the February 28 deadline, because of King’s potential restatement of its financial results, the former company revealed yesterday.
In a statement, Mylan’s vice chairman and chief executive, Robert Coury, said that the firm was continuing to assess King’s statements that it will be restating its previously reported financial results for 2002, 2003 and the first six months of 2004 to recognise a reserve fund gained through product returns and stock management, and that it is evaluating whether financial results for any earlier periods require restatement [[09/12/04d]]. Mylan has the right to terminate the agreement if King restates its financials [[29/10/04b]].
Under the terms of the transaction that was announced in July 2004 and which Mylan hoped would help it make the transition from copycat drugs to more profitable branded pharmaceuticals, King shareholders were set to receive 0.9 Mylan shares for each King share [[27/07/04d]]. If the deal is not finalised by the deadline, either company will have the right to terminate the transaction.
“While our continued study may lead to a renegotiation of the existing merger agreement, there can be no assurance that a revised agreement will be reached or that any transaction will occur. Until a resolution is reached, Mylan intends to have no further comment on this situation,” Mr Coury said.
The news will likely please Mylan’s billionaire financier. Carl Icahn, who has been attempting to derail the merger ever since it was first revealed, deeming it “too expensive” and “not justified” [[16/12/04b]], [[22/11/04b]].