American Pharmaceutical Partners ( APPX) plans to merge with its parent company, privately held American BioScience, uniting two outfits founded by Patrick Soon-Shiong and bringing their controversial management structure under the same roof.

Through an all-stock transaction, the companies will merge and become known as Abraxis BioScience. American BioScience currently owns about 64.4% of American Pharmaceutical. The companies expect to close the deal in the first half of 2006.

"We believe this merger is a unique opportunity to combine the strengths of a development-stage biotechnology company with those of a growing and profitable injectable pharmaceutical business to create a fully integrated, global biopharmaceutical leader," said Soon-Shiong, the executive chairman of American Pharmaceutical and the chairman and CEO of American BioScience.

Shareholders of American Pharmaceutical were miffed upon learning of the deal, and they sent the stock down $7.66, or 16.1%, to $39.95.

On the basis of American Pharmaceutical's closing stock price Nov. 25, the combined company would have a market value of about $7.5 billion. Combined revenue would exceed $500 million.

American Pharmaceutical will issue about 86 million shares to American BioScience stockholders, raising American BioScience's stake in the combined company to roughly 83.5%.

Soon-Shiong has now assumed the duties of chairman and chief executive of American Pharmaceutical, replacing Al Heller, who resigned as the company's CEO and as a member of the board. Soon-Shiong who will be chairman and CEO of Abraxis BioScience once the merger is completed.

The centerpiece of the companies' merger is the breast cancer drug Abraxane, a branded product that was approved by the Food and Drug Administration earlier in the year. Other products the firm will own will include an injectables business focused on the oncology, critical care and anti-infective markets.

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