Abbott Makes Deal for Kos

The acquisition is valued at $3.7 billion.
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Abbott Laboratories

(ABT) - Get Report

is moving to broaden its offerings through the acquisition of specialty drugmaker

Kos Pharmaceuticals

(KOSP)

in a deal worth $3.7 billion.

"Kos Pharmaceuticals is an excellent strategic fit for Abbott, both scientifically and commercially," said Miles White, Abbott's chairman and CEO. "This acquisition expands Abbott's presence in the lipid-management market and will provide several on-market and late-stage pipeline products."

Through the acquisition, which amounts to $78 a share, Abbott gains a stronger presence in the $20 billion market for cholesterol treatments by taking over the Kos drugs Niaspan and Advicor.

Kos is also in late-stage development with Simcor, a combination of Niaspan and a generic version of

Merck's

(MRK) - Get Report

cholesterol drug Zocor, which is expected to be submitted to the Food and Drug Administration for regulatory review in the first half of 2007.

Abbott already makes the lipid-management drug TriCor and is working on a combination of TriCor and

AstraZeneca's

(AZN) - Get Report

Crestor using technology from Ireland's

Elan

(ELN)

.

Kos is also developing, among other treatments, asthma drug Flutiform and an inhaled insulin product.

Abbott expects the transaction to reduce earnings by 2 or 3 cents a share in 2007, be neutral to accretive in 2008 and lead to a significant profit addition thereafter.

Once the deal closes, Abbott expects to take one-time charges, primarily for in-process research and development and integration expenses.

Abbott's shares fell 0.8% to $47.27, while Kos' shares jumped 53.5% to $76.90 Monday.