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Filed by Jones Pharma Incorporated
Pursuant to Rule 425 under the Securities Act of 1933
Commission File No.:01-15098
Subject Company: Jones Pharma Incorporated
THE FOLLOWING PRESS RELEASE WAS DISSEMINATED BY JONES PHARMA INCORPORATED,
ON JULY 13, 2000
N E W S R E L E A S E
[JONES PHARMA LOGO]
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FOR IMMEDIATE RELEASE
KING PHARMACEUTICALS AND JONES PHARMA INCORPORATED
ANNOUNCE MERGER
BRISTOL, TENNESSEE and ST. LOUIS, MISSOURI, July 13, 2000 - King
Pharmaceuticals, Inc. (NYSE:KG) and Jones Pharma Incorporated (NASDAQ:JMED)
announced today that they have entered into a definitive agreement to merge the
two companies in a stock-for-stock transaction. The merger represents the
combination of two of the premier specialty pharmaceutical companies and results
in a company with a diversified therapeutic portfolio with multiple, rapidly
growing products. King expects the transaction to be accreative to earnings
immediately upon closing, excluding any non-recurring transaction expenses, and
will add approximately 3% to 4% to projected earnings per share for 2001.
Following completion of the transaction, the new company will have a combined
sales force of over 400 representatives, $552.6 million pro forma revenues for
the most recent preceding 12 month period, and an enterprise value of
approximately $7.8 billion.
Under the terms of the agreement, which has been approved by the boards of
directors of both companies, holders of Jones common stock will be entitled to
receive 1.125 shares of King common stock in exchange for each share of Jones
common stock. Based on the closing price of King common stock on July 12, 2000,
the merger values each share of Jones common stock at approximately $51.12, or
approximately $3.4 billion, providing a premium of approximately 38% over the
trailing 30 calendar day average closing price per share of Jones common stock.
Jones common stock closed at $43.75 per share on July 12, 2000. Following the
completion of the merger, Mr. Andrew Franz, Chief Operating Officer of Jones,
will be joining King's board of directors, and will become President and CEO of
Jones, as a wholly owned subsidiary of King. The transaction is expected to be
accounted for as a tax-free pooling of interests transaction. Closing of the
transaction is subject to approval by the holders of a majority of the
outstanding common stock of King and Jones, appropriate governmental approval,
and other customary conditions, and is expected to be completed before the end
of 2000.
John M. Gregory, Chairman and Chief Executive Officer of King, stated, "The
merger of King and Jones will provide an excellent business combination that
will rapidly position King as one of the largest specialty pharmaceutical
companies with an estimated combined market capitalization of over $7 billion.
The merger will provide King with a more diversified portfolio of branded
pharmaceutical products with the addition of Jones' Levoxyl(R), Thrombin-JMI(R),
and Cytomel(R) such that the Company's key therapeutic categories will be
cardiovascular, anti-infectives, endocrinology, and women's health. Moreover,
King's sales force will increase to over 400 representatives which will provide
potential synergies in the expanded marketing of our products." Mr. Gregory
added, "The significantly greater market capitalization and the potential
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substantial reduction in the Company's outstanding debt resulting from the
contemplated merger will better position King for the continued execution of our
plan to strategically acquire branded pharmaceutical products and companies,
while continuing to grow our current products through focused promotion and
marketing."
Dennis M. Jones, Chairman and Chief Executive Officer of Jones, said, "Following
an exciting 19-year history of growth, a merger with King presents an exciting
opportunity for Jones Pharma's shareholders and associates. It provides us with
a 45% stake in a fully integrated specialty pharmaceutical company with a
promising R&D pipeline and an outstanding marketing capability. This merger will
allow us to take advantage of a combined sales and marketing infrastructure of
over 400 sales people and to increase the marketing efforts of our products,
particularly with general practitioners and family practitioners. I am also
excited about this transaction because of my confidence in King and its
management team. Mr. John Gregory is a very bright, energetic young
entrepreneur. He has built one of the leading emerging pharmaceutical companies,
in just a few short years. This fact gives me confidence in his ability to
continue King's rapid growth, not to mention their Altace(R) news released on
May 1, 2000, reporting on the FDA's Cardio-Renal Drugs Advisory Committee
unanimously recommending the approval of Altace(R) for additional indications
after the HOPE Study data was submitted."
Mr. Jones further commented, "After 36 enjoyable years in the pharmaceutical
industry, I believe it is time for Judy and me to step down. However, I plan on
enthusiastically remaining with the combined Company as a consultant and
significant shareholder. Further, Jones' strong management team, including
Andrew Franz and Mike Bramblett, will be assuming executive positions in the
combined Company and will be in a position of continuing to make significant
contributions."
Jones Pharma Incorporated, founded in 1981, is an emerging specialty
pharmaceutical company with a national sales force of 123 dedicated sales
representatives who promote Jones' products throughout the United States. Jones'
strategy has been to build a portfolio of growing products through the
acquisition of under-promoted, promotion sensitive FDA approved products from
other pharmaceutical companies. About half of Jones' sales are generated by the
thyroid-disorder drugs Levoxyl(R), Tapazole(R), Triostat(R), and Cytomel(R).
Jones' other products include Thrombin-JMI(R) for controlling blood loss during
surgery; Brevital Sodium(R), an anesthetic; and veterinary pharmaceuticals,
Soloxine(R), Tussigon(R), and Pancrezyme(R). In early 2000, Jones' 574% ten-year
sales growth and 1,633% ten-year earnings growth were recognized by the Wall
Street Journal's Fifth Annual Shareholder Scoreboard. Jones was ranked number
one in ten-year shareholder return when compared to its peers within the
pharmaceutical sector. When compared to America's top 1,000 companies in 76
industries, Jones Pharma was ranked 23rd in five-year shareholder return. In
addition, Jones was named by Forbes in November 1999 as one of the "200 Best
Small Companies in America" for seven of the last ten years.
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In the event the merger is terminated by either company, King and Jones have
agreed that, in certain circumstances, a $100 million cash termination fee will
be paid by the terminating party. Jones may elect not to proceed with the
transaction if the average closing price of King common stock falls below $29.33
per share, unless King elects to increase the exchange ratio to a number equal
to the average trading price divided by $33.00 per share. For purposes of the
foregoing, the "average trading price" will be computed by taking the
volume-weighted average sales price per share as reported on the New York Stock
Exchange during the twenty (20) consecutive trading days ending with and
including the sixth trading day immediately preceding Jones' shareholders
meeting.
King previously reported that revenues totaled $379.9 million, net income
equaled $51.0 million, and diluted earnings per share was 61 cents, excluding
extraordinary charges, for the year ended December 31, 1999. For the first
quarter 2000, King reported that revenues totaled $91.4 million, net income
equaled $11.5 million, and diluted earnings per share was 14 cents, excluding
merger and restructuring costs. Jones previously reported that revenues totaled
$132.5 million, net income equaled $48.9 million, and diluted earnings per share
was 73 cents for the year ended December 31, 1999. For the first quarter 2000,
Jones reported that revenues totaled $45.7 million, net income equaled $19.2
million, and diluted earnings per share was 28 cents. Jones reported that cash,
cash equivalents, and investments totaled $199.8 million on March 31, 2000.
Credit Suisse First Boston acted as financial advisor to King and Chase H&Q
acted as financial advisor to Jones.
A conference call regarding the acquisition is scheduled for 2:00 p.m., E.D.T.,
on Thursday, July 13, 2000. Interested parties may listen to the call by dialing
in the U.S., 1-888-868-9078, or outside the U.S., 973-628-6885, and by
requesting the King Pharmaceuticals/Jones Pharma conference call. A replay of
the call will be available for two (2) weeks by dialing in the U.S.,
1-888-264-3165 (access code: 7927), or outside the U.S., 402-220-0140 (access
code: 7927).
King, headquartered in Bristol, Tennessee, is a vertically integrated
pharmaceutical company that manufactures, markets, and sells primarily branded
prescription pharmaceutical products. King seeks to capitalize on niche
opportunities in the pharmaceutical industry created by cost containment
initiatives and consolidation among large global pharmaceutical companies.
King's strategy is to acquire branded pharmaceutical products and to increase
their sales by focused promotion and marketing and through product life cycle
management.
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This release may contain forward-looking statements which reflect management's
current views of future events and operations. These forward-looking statements
involve certain significant risks and uncertainties, and actual results may
differ materially from the forward-looking statements. Some important factors
which may cause results to differ include: the ability of King and Jones to
consummate the contemplated merger described above, including approval by the
shareholders of both King and Jones, management of King's growth and integration
of its acquisitions, specifically including, but not limited to, the
contemplated merger, the ability of King to realize potential synergies from the
contemplated merger, significant leverage and debt service requirements of King,
dependence on King's ability to continue to acquire branded products, dependence
on sales of King's products, the high cost and uncertainty of research, clinical
trials, and other development activities involving pharmaceutical products, and
the unpredictability of the duration and results of the U.S. Food and Drug
Administration's review of New Drug Applications and other filings and/or the
review of other regulatory agencies worldwide. Other important factors which may
cause results to differ materially from the forward-looking statements are
discussed in various sections of King's and Jones' latest Form 10-K and other
filings with the Securities and Exchange Commission. King does not undertake to
publicly update or revise any of its forward-looking statements even if
experience or future changes show that the indicated results or events will not
be realized.
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Contacts:
KING: Kyle P. Macione, Executive Vice President, Corporate Affairs
423-989-8077
JONES: Michael T. Bramblett, Executive Vice President
314-576-6100
EXECUTIVE OFFICES
KING PHARMACEUTICALS - 501 FIFTH STREET, BRISTOL, TENNESSEE 37620
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This document is being filed pursuant to Rule 425 under the Securities Act of
1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act
of 1934. This document does not constitute an offer or sale of securities.
Shareholders of King and other investors are urged to read the joint proxy
statement/prospectus which will be included in the registration statement on
Form S-4 to be filed by King in connection with the merger because it will
contain important information. After this document is filed, it will be
available free of charge on the Securities and Exchange Commission's website at
www.sec.gov and from Jones by mail to Jones Pharma Incorporated, 1945 Craig
Road, St. Louis, Missouri 63146, Attention: Investor Relations, Telephone
(314)576-6100.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
King plans to file a registration statement on Form S-4 with the SEC in
connection with the merger, and Jones and King expect to mail a joint proxy
statement/prospectus to shareholders of Jones and King containing information
about the merger. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER
RELEVANT DOCUMENTS TO BE FILED WITH THE SEC CAREFULLY WHEN THEY ARE AVAILABLE.
The registration statement and the joint proxy statement/prospectus will
contain important information about Jones, King, the merger, the persons
soliciting proxies relating to the merger, their interests in the merger, and
related matters. Investors and security holders will be able to obtain free
copies of these documents through the website maintained by the U.S. Securities
and Exchange Commission at http://www.sec.gov. Free copies of the joint proxy
statement/prospectus and these other documents may also be obtained from Jones
by mail to Jones Pharma Incorporated, 1945 Craig Road, St. Louis, Missouri
63146, Attention: Investor Relations, Telephone (314) 576-6100. READ THE
DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING A DECISION
CONCERNING THE MERGER.
In addition to the registration statement and the joint proxy
statement/prospectus, King and Jones file annual, quarterly and special reports,
proxy statements and other information with the commission. You may read and
copy any reports,
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statements or other information filed by King or Jones at the SEC Public
Reference Rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at any of
the SEC's other public reference rooms in New York, Chicago, and Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. King's and Jones' filings with the commission are also
available to the public from commercial document retrieval services and at the
website maintained by the SEC at http://www.sec.gov.
King, its directors, executive officers and certain other members of management
and employees may be soliciting proxies from King shareholders in favor of the
merger. Information concerning the participants in the solicitation will be set
forth on a Schedule 14A filed as soon as practicable.
Jones, its directors, executive officers and certain other members of management
and employees may be soliciting proxies from Jones shareholders in favor of the
merger. Information concerning the participants in the solicitation will be set
forth on a Schedule 14A filed as soon as practicable.