Alpharma adopts rights plan, amends change-in-control plan

By Lisa Kerner

Charlotte, N.C., Sept. 2 - The board of directors of Alpharma Inc. adopted a limited-duration shareholder rights plan in response to King Pharmaceuticals, Inc.'s unsolicited offer to acquire the company for $33 per share.

Alpharma's board said King's offer is inadequate and not in the best interest of the company's shareholders.

Under Alpharma's plan, the rights will become exercisable if a person acquires 15% or more of the class A common stock of Alpharma or begins a tender offer that could result in that person owning 15% or more of the class A common stock of Alpharma, a company news release said.

The plan, which is set to expire on Sept. 1, 2009, does not apply to existing shareholders who own 15% or more of Alpharma's existing class A common stock.

King - a Bristol, Tenn., integrated branded pharmaceutical company - intends to acquire a majority of Alpharma's stock and is seeking clearance from the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

"The rights plan will not, and is not intended to, prevent a takeover of the company on terms that are fair to and in the best interests of all Alpharma shareholders," Alpharma president and chief executive officer Dean Mitchell said in the release.

Mitchell noted that the Food and Drug Administration accepted, and designated for priority review, Alpharma's new drug application for Embeda.

"We believe this positive regulatory development for Alpharma represents another example of our ability to create significant value that should rightfully benefit our shareholders," Mitchell said.

Change-in-control plan amended

Alpharma's board also adopted amendments to the company's change-in-control plan as part of its overall program to retain Alpharma's "business leaders and valuable employees" and keep them focused on business operations.

The plan is generally applicable to named executive officers and some other officers and key executives.

The amendments provide that:

• An executive at the employment level of vice president or director will receive his or her bonus or other cash incentive award at 100% of his or her annual target rate for the full period during which he or she is receiving CIC benefits;

• An executive will receive reasonable and customary outplacement support services; and

• Alpharma will be obligated to provide any excise tax gross-up payment if, prior to March 31, 2009, the company signs a definitive agreement for a change in control or a change in control occurs. On Sept. 1, Alpharma, a Bridgewater, N.J., specialty pharmaceutical company, entered into employment agreements with vice presidents Dr. Ronald Warner and Carol A. Wrenn as a result of the amendments. The agreement supersedes prior agreements, according to a form 8-K filed with the Securities and Exchange Commission.

Alpharma is a Bridgewater, N.J.-based specialty pharmaceutical and animal health company.

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