King Pharmaceuticals Inc. said Tuesday it completed its $1.6 billion purchase of rival Alpharma, unifying two pain drug makers.

King's tender offer for Alpharma closed Monday morning, with Alpharma stockholders offering 84 percent of their shares in favor of the deal, excluding shares tendered through notices of guaranteed delivery. The buyout values Alpharma at $37 per share. The company is now a wholly owned subsidiary of King and its shares will no longer be publicly traded.
King agreed to sell Alpharma's opioid painkiller Kadian to that drug's maker, Actavis, to avoid antitrust concerns. Actavis will pay King up to $127.5 million in cash for the drug, depending on how well Kadian sells over the next year and a half.

Actavis said it plans to sell Kadian in the U.S. only. The drug is used to treat moderate to severe chronic pain, and it is sold in a range of doses from 20 milligrams to 200 milligrams. Actavis is based in Iceland, but has facilities in four U.S. states, including the Elizabeth, N.J. plant that makes Kadian.

The Federal Trade Commission required the sale of Kadian because the drug is similar to King's product Avinza, and the agency said competition needed to be preserved.

King also merged Alpharma with its Albert Acquisition Corp. subsidiary.
When Bristol, Tenn.-based King made its buyout offer for Alpharma in August, it said the combined company would be a leading specialty drugmaker with a larger array of painkillers, greater sales capabilities and a stronger pipeline.

King makes the muscle relaxant Skelaxin and the surgical blood-clotting agent Thrombin-JMI, but its sales dropped sharply after the patents on other pain drug, Altace, were overturned last fall. The company is now seeking approval for a painkiller called Remoxy, which is designed to be abuse-resistant.

Alpharma is asking for approval its own abuse-resistant morphine drug candidate, called Embeda. It also sells the Flector pain patch.
In a note to clients, Oppenheimer analyst John Newman said the sale of Kadian makes Embeda more important to King's future. But it's not clear regulators will approve the drug: last month, a Food and Drug Administration panel said Embeda's formulation might deter abuse, but didn't see the drug as a major advance from older products.
The panel also cited potential safety issues with the drug.
Cowen and Co. analyst Ian Sanderson said King now has four drugs awaiting FDA approval, and six or seven in mid to late stage development.

King made an unsolicited offer to buy Bridgewater, N.J.-based Alpharma for $1.4 billion, or $33 per share, in August. Alpharma rejected that offer a 49 percent premium to its stock price — and said it undervalued the company. King said it might take its offer directly to Alpharma shareholders, and the following month, Alpharma adopted a poison pill provision in response. King then raised its bid to $1.6 billion. Alpharma accepted the offer Nov. 24.
In afternoon trading, King shares rose 33 cents, or 3.3 percent, to $10.27.