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King Pharmaceuticals Inc · 425 · Jones Pharma Inc · On 7/24/00

Filed On 7/24/00 8:03pm ET · SEC File 0-15098 · Accession Number 950144-0-9014

  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 7/25/00  King Pharmaceuticals Inc          425                    1:34   Jones Pharma Inc                  Bowne of Atlanta Inc/FA

Business-Combination Transaction Communication · Rule 425
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 425         King Pharmaceuticals, Inc.                            34     41K 

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Filed by King Pharmaceuticals, Inc. 

Pursuant to Rule 425 under the Securities and Exchange Act of 1933
Commission File No.: 001-15875
Subject Company: JONES PHARMA INCORPORATED  

THE FOLLOWING ARE MATERIALS PRESENTED BY REPRESENTATIVES OF KING                
PHARMACEUTICALS, INC. AND JONES PHARMA INCORPORATED TO INVESTORS AND ANALYSTS   
BEGINNING ON JULY 24, 2000.                                                     

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[KING LOGO]                                                                     

[KING PHARMACEUTICALS LOGO]                  [JONES LOGO]     

THE COMBINATION OF TWO
LEADING EMERGING PHARMACEUTICAL 
COMPANIES 

                                                                               1

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[KING LOGO] FORWARD-LOOKING STATEMENTS                                          

        THIS PRESENTATION MAY CONTAIN FORWARD-LOOKING STATEMENTS WHICH REFLECT
MANAGEMENT'S CURRENT VIEW OF FUTURE EVENTS AND OPERATIONS. THE
  FORWARD-LOOKING STATEMENTS INVOLVE CERTAIN SIGNIFICANT RISKS AND
  UNCERTAINTIES, AND ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE
   FORWARD-LOOKING STATEMENTS. CERTAIN FACTORS THAT MAY CAUSE ACTUAL
      RESULTS TO DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS ARE
      DISCUSSED IN VARIOUS SECTIONS OF JONES' AND KING'S FORM 10-K FOR THE
       YEAR ENDED DECEMBER 31, 1999, AND THE JONES' AND KING'S FORM 10-Q FOR
         THE QUARTER ENDED MARCH 31, 2000, WHICH ARE ON FILE WITH THE SECURITIES
       AND EXCHANGE COMMISSION ("SEC"), THE COMPANY'S FORM S-4 AS FILED WITH
        THE SEC ON DECEMBER 10, 1999, AND THE COMPANY'S FORM S-3 AS FILED WITH
    THE SEC ON JANUARY 21, 2000, INCLUDING THE COMPANY'S PROSPECTUS AS
         SUPPLEMENTED AND FILED WITH THE SEC ON APRIL 19, 2000. THE COMPANY 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.                       

                                                                               2

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[KING LOGO] TRANSACTION OVERVIEW                                                

-        King to issue 1.125 King shares for each Jones share 

-        One Jones Representative to join King's board        

        -        Merger structured as a pooling of interests, tax free to both
King and Jones' shareholders                

-        $100 MM reciprocal break-up fee                      

-        Walk-away and top-up right                           

-        Timing: Depending on regulatory review, Q3 or Q4 2000

                                                                               3

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[KING LOGO] A POWERFUL COMBINATION ...                                          

-        A new leading emerging growth pharmaceutical company 

-        Diversified therapeutic focus                        

-        Multiple growth engines                              

-        Strong cross-selling opportunities with a broader,   
complementary sales force                   

-        Financial strength                                   

-        Enhanced liquidity                                   

-        EPS Accretive                                        

                                                                               4

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[KING LOGO] ... COMBINING TWO STRONG PERFORMERS ...                             

KING

                                                                [Download Table]

===============================
                   '97-'99 CAGR
-------------------------------

                               
Revenues               137%    

EBITDA                 161%    

Net Income              75%    
-------------------------------

 JONES

                                                                [Download Table]

===============================
                   '97-'99 CAGR
-------------------------------

                               
Revenues                22%    

EBITDA                  34%    

Net Income              40%    
-------------------------------

                                                                               5

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[KING LOGO] ... CREATES A NEW LEADING EMERGING PHARMACEUTICAL COMPANY ...       

         -        Combination creates one of the premier emerging pharmaceutical
companies with over $5.4 BN market value(1) 

      -        Combined company has approximately $591 MM in revenues, and
$279 MM in EBITDA(2)                        

     -        One of the most profitable companies with pro forma EBITDA
margin of 47.2%(2)                          

    -        418 sales people focused on GP/FPs, endocrinologists, and
hospitals.                                  

 (1)      As of market close on July 21, 2000.

             (2)      Using LTM financials for the twelve months ended
                          6/30/00. Depreciation for Jones estimated using 1999
            depreciation as a percentage of sales.

                                                                               6

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[KING LOGO] ... WITH A DIVERSIFIED THERAPEUTIC PRESENCE ...                     

1999 SALES - $512.4 MM

[GRAPH] 

 ESTABLISHED BRAND NAMES

CARDIOVASCULAR                                                                  

Altace                                                                

ANTI-INFECTIVES/ANTI-VIRALS                                                     

Lorabid                                                               

Fluogen                                                               

Cortisporin                                                           

ENDOCRINOLOGY                                                                   

Levoxyl                                                               

Tapazole                                                              

Cytomel                                                               

SURGICAL                                                                        

Thrombin                                                              

                                                                               7

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[KING LOGO] ... A BALANCED PRODUCT PORTFOLIO ...                                

KING

$379.9 MM 

[GRAPH] 

JONES 

$132.5 MM 

[GRAPH] 

 1999 REVENUE BY PRODUCT

COMBINED

$512.4 MM 

[GRAPH] 

     (1)      Q3 and Q4 revenues annualized. Percentages based on a full
year of Lorabid.                            

                                                                               8

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[KING LOGO] ... MULTIPLE GROWTH ENGINES ...                                     

(DOLLARS IN MILLIONS)                                                           

                                                                [Download Table]

===========================================================
                         1998          1999        % Change
-----------------------------------------------------------

                                                           
Altace                  $ 93.9        $122.4          30.4%

Levoxyl                   25.7          32.8          27.6%

Thrombin                  17.3          33.7          95.1%

Cytomel/Triostat           8.6          13.6          58.8%

-----------------------------------------------------------

                                                                               9

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[KING LOGO] ... MULTIPLE GROWTH ENGINES ...                                     

                                                                [Download Table]

(DOLLARS IN MILLIONS)                                               
====================================================================
                           H1 `99          H1 `00           % Change
--------------------------------------------------------------------

                                                                    
Altace                      $45.4           $64.1             41.1% 

Levoxyl                      14.6            25.6             75.6% 

Thrombin                     14.1            25.3             80.3% 

Cytomel/Triostat              7.7            10.8             40.8% 

--------------------------------------------------------------------

                                                                              10

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[KING LOGO] ... INCLUDING ALTACE, A DIFFERENTIATED ACE INHIBITOR ...            

-        The most clinically proven ACE inhibitor             

-        The HOPE study                                       

            -        Altace found to significantly reduce death from
cardiovascular disease    

-        Published in NEJM in January 2000  

    -        FDA recommendation for supplemental NDA for prevention of
            cardiovascular disease, stroke and "all-cause mortality"

ALTACE(R) NEW RX'S PER WEEK(1)

ALTACE NEW RX'S: 4 PER WEEK MOVING AVG
IMS AMERICA 

[CHART] 

Source: IMS America                                                             

(1)      4 week moving average                                                  

                                                                              11

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[KING LOGO] ... COMPLEMENTED BY LEVOXYL, THROMBIN, AND CYTOMEL                  

LEVOXYL 

-        # 2 in hypothyroidism market                         

-        24.8% share of Rx in 1999                            

-        20th most prescribed drug in the U.S. in 1999        

-        31% sales CAGR since its acquisition by Jones in 1996

THROMBIN

        -        One of the leading products in the surgical hemostasis market

-        The leading bovine thrombin product                  

-        Growth potential from fibrin sealant products        

-        22% 10-year sales CAGR                               

CYTOMEL 

 -        Studies underway on ability to enhance anti-depressant
activity                                    

-        39% sales CAGR since its acquisition by Jones in 1997

                                                                              12

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[KING LOGO] NATIONWIDE SALES INFRASTRUCTURE                                     

[MAP] 

                                                                              13

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[KING LOGO] NATIONWIDE MANUFACTURING INFRASTRUCTURE                             

ROCHESTER, MI 

-        Manufactures Fluogen                                 

-        Contract Manufacturing                               

MIDDLETON, WI 

-        Manufactures Thrombin                                

ST. LOUIS, MO 

-        Manufacturing, distribution, JMED headquarters       

CANTON, OH

        -        Warehousing and distribution of controlled substance products

BRISTOL, TN 

-        Manufacturing, KG headquarters                       

ST. PETERSBURG, FL

-        Manufactures Levoxyl                                 

                                                                              14

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[KING LOGO] SIGNIFICANT POTENTIAL SYNERGIES                                     

-        Cross-selling opportunities                          

               -        Levoxyl and Cytomel marketed by King's GP/FP sales
force                     

              -        Altace and Lorabid marketed by Jones' sales force

-        Selected cost savings opportunities                  

-        Financial strength reduces overall cost of capital   

                                                                              15

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[KING LOGO] PRO FORMA HISTORICAL FINANCIAL PERFORMANCE                          

                                                                [Download Table]

(DOLLARS IN MILLIONS)                                                            
=================================================================================
                           1997           1998          1999          '97-'99    
                                                                        CAGR     
---------------------------------------------------------------------------------

                                                                                 
Revenues                  $156.7         $294.4        $512.4           80.8%    
    % Growth                               87.9%         74.0%                   

EBITDA                    $ 68.3         $131.1        $243.6           88.9%    
    % of Revenues           43.6%          44.5%         47.5%                   

Net Income(1)             $ 41.8         $ 75.7        $100.6           55.1%    
    % of Revenues           26.7%          25.7%         19.6%                   
---------------------------------------------------------------------------------

(1)      Before extraordinary items. Includes continuing operations only.       

                                                                              16

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[KING LOGO] PRO FORMA HISTORICAL FINANCIAL PERFORMANCE                          

                                                                [Download Table]

(DOLLARS IN MILLIONS)                                                 
======================================================================
                            H1 `99           H1 `00           % CHANGE
----------------------------------------------------------------------

                                                                      
Revenues                    $213.3           $292.0            36.9%  

EBITDA                      $107.8           $146.4            35.8%  
    % of Revenues             50.5%            50.1%                  

Net Income(1)               $ 44.1           $ 67.4            52.8%  
    % of Revenues             20.7%            23.1%                  
----------------------------------------------------------------------

(1)      Before extraordinary items.                                            

                                                                              17

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[KING LOGO] CAPITALIZATION                                                      

                                                                [Download Table]

PRO FORMA CAPITALIZATION                                    
(DOLLARS IN MILLIONS)                                       
============================================================
PERIOD ENDED 6/30/00                              KING/JONES
------------------------------------------------------------

                                                            
Debt(1)                                             $150.0  

Shareholders Equity                                 $795.7  
                                                    ------  
Total Cap                                           $945.7  

Debt/EBITDA                                           0.5x  

Total Debt/Total Cap                                 15.9%  
----------------------------------------------------------- 

(1)      Pro forma for King debt paydown with excess cash.                      

                                                                              18

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[KING LOGO] RECENT DEVELOPMENTS - ALTACE CO-PROMOTION                           

-        Co-promotion agreement signed on June 23, 2000, with 
   Wyeth-Ayerst division of American Home Products

-        AHP will assign over 1000 sales reps                 

         -        Annual fee to AHP based on a range of 20% to 50% of annual net
sales                                       

-        Upon execution:                                      

-        $75 million equity investment      

-        $25 million cash payment           

     -        $50 million cash payment upon FDA approval of pending sNDA

    -        Right to purchase 3 other branded pharmaceutical products

                                                                              19

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[KING LOGO] STRONG, EXPERIENCED MANAGEMENT TEAM                                 

                                                        [Enlarge/Download Table]

NAME                                                     TITLE                                     INDUSTRY EXPERIENCE
----------------------------------------------------------------------------------------------------------------------

                                                                                                                      
John Gregory                       Chairman and CEO, King Pharmaceuticals                                  14         

Joseph Gregory                     Vice Chairman-Operations, King Pharmaceuticals                          14         
                                   President and CEO, Monarch Pharmaceuticals                                         

Richard Williams                   Vice Chairman-Research, King Pharmaceuticals                            28         

Jeff Gregory                       President, King Pharmaceuticals                                         11         
                                   President and CEO, Parkedale Pharmaceuticals                                       

Andrew Franz                       President and CEO, Jones subsidiary                                     27         

Ernie Bourne                       President and CEO, King Pharmaceuticals International                   4          

Brian Shrader                      CFO, King Pharmaceuticals                                               9          

Michael Bramblett                  Executive Vice President, Corporate Development                         10         

Kyle Macione                       Executive Vice President, Corporate Affairs                             4          

John Bellamy                       Executive Vice President, General Counsel                               5          

                                                                              20

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[KING LOGO] THE KING/JONES ADVANTAGE                                            

-        Uniquely positioned for growth within the emerging   
pharmaceutical sector                       

-        Diversified therapeutic focus provides opportunities 

       -        Operating strategy - acquisition and enhancement of existing
product lines                               

  -        Stronger sales force of 418 reps with substantial cross
selling opportunities                       

-        Deep, experienced management team and labor force    

-        Proven track record of profitability and growth      

                                                                              21

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 POTENTIAL Q&A
--------------------------------------------------------------------------------

AGREEMENT                                                                       

Q: HOW MANY SHARES OF KING WILL I NOW OWN?                                      

A: Jones shareholders will receive 1.125 shares of King for each share of Jones.
If King's share price falls below $29.33, Jones has the right to walk away from 
the transaction. However, if King then decides to deliver $33.00 in stock for   
each share of Jones, the transaction will be consummated. In this case, the     
number of shares which King would have to deliver would be determined using a   
pricing period which is twenty days preceding the annual meeting by six days.   

Q: HOW WILL THE TRANSACTION BE STRUCTURED?                                      

A: The merger is expected to be accounted for as a pooling-of-interests and is  
also expected to be tax-free to King and Jones shareholders.                    

Q: WHAT IS THE TIMING OF THE MERGER?                                            

A: We expect the merger to be completed as early as Q3 00 depending on          
regulatory review.                                                              

Q: WHAT PROVISIONS ARE IN THE AGREEMENT TO PROTECT KING/JONES IN THE EVENT THE  
MERGER DOES NOT TAKE PLACE?                                                     

A: A $100MM reciprocal break up fee payable to King/Jones under certain         
circumstances.                                                                  

Q: WHY DOES THE PREMIUM APPEAR SO LOW?                                          

A: When we announced the transaction, the premium to the previous day's closing 
price was about 17%, but Jones' stock had been trading up despite any particular
newsflow from the Company. The price also represented about a 35% premium to    
Jones' one month trading average, which is in-line with similar transactions,   
and is close to Jones' 52-week-high.                                            

Q:  HOW WAS THE EXCHANGE RATIO ARRIVED AT?                                      

A:  We considered historical exchange ratios in addition to standard valuation  
techniques.                                                                     

Q:  WHAT ARE THE CLOSING CONDITIONS?                                            

A: The closing conditions are the standard conditions for a merger of this type,
including a shareholders' vote by both sides, HSR approval, and clearance of the
proxy by the SEC.                                                               

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Q:  ARE THERE LIKELY TO BE SUBSTANTIAL HSR ISSUES?                              

A:  We don't believe there will be any anti-trust issues.                       

Q:  IS THERE ANY LOCK-UP ON THE SHARES OF DENNIS AND JUDITH JONES?              

A:  Not beyond the normal restrictions accorded affiliates and until pooled     
financial results are publicly released.                                        

Q: WILL THERE CONTINUE TO BE A DIVIDEND?                                        

A: Jones will continue to pay its normal dividends, if any, in the normal       
course, until closing. After closing, King will continue its current policy of  
not paying dividends.                                                           

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BOARD OF DIRECTORS                                                              

Q: WHAT WILL HAPPEN TO DENNIS JONES?                                            

A: Due to personal reasons, Dennis Jones has elected to retire from active      
management of the Company. However, he has elected to remain a consultant to the
Company. We have very much enjoyed working with Dennis on this transaction and  
look forward to his insight and consultation going forward.                     

Q: WHAT WILL BE THE COMPOSITION OF THE COMBINED COMPANY'S BOARD?                

A: King's board plus Drew Franz.                                                

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JONES                                                                           

PRODUCTS                                                                        

Q: HOW DO YOU EXPECT THROMBIN TO COMPETE WITH HUMAN THROMBIN AND FIBRIN         
SEALANTS?                                                                       

A: We believe that thrombin will remain competitive due to:                     
1. Strength of our combined sales force selling into hospitals;           
2. Our thrombin is priced advantageously relative to alternatives, namely,
human thrombin; and                                                 
 3. Fibrin sealant companies use Jones bovine thrombin in their products. It
   should be noted that CoStasis, a fibrin product of Cohesion Technology,
 has been approved by the FDA on June, 2000. CoStasis will be launched
  July, 2000 by US Surgical under an agreement with Cohesion Technology.

Q: HOW WILL GENERIC COMPETITION AFFECT SALES OF TAPAZOLE?                       

A: We believe that Par will continue to gain market share, however, we will     
continue to allocate part of our sales force to support this product. We think  
that the main engines of growth for the combined Company will include Altace,   
Lorabid, Cortisporin, Levoxyl, Thrombin and Cytomel and do not believe that a   
decrease in Tapazole sales will have a material adverse impact on the business. 

Q: ARE YOU EXPECTING TO PURSUE ADDITIONAL INDICATIONS FOR CYTOMEL?              

A: Studies are underway to determine the possible use of Cytomel in depressed   
patients. Peer articles have indicated that there is benefit in using Cytomel in
bypass surgery and other cardiothoracic procedures. We will decide at a later   
stage if we will pursue these indications with the FDA.                         

Q: WHAT IS YOUR STRATEGY WITH RESPECT TO LEVOXYL?                               

A: We plan to submit our NDA filing shortly to comply with FDA guidelines. We   
expect to be one of the first companies to submit an NDA for levothyroxine.     
After the merger, our sales force will have more than 400 people. We expect to  
achieve substantial productivity gains from using our combined GP/FP sales force
to promote the product. Historical data demonstrates that Levoxyl is highly     
sensitive to promotional and detailing efforts. We believe that by modifying the
calling cycle of the sales force and increasing the number of sales reps        
detailing Levoxyl, we could achieve a substantial increase in the number of     
Levoxyl writers. Since Levoxyl is currently mostly prescribed as written, an    
increase in the                                                                 

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number of prescriptions should have a direct impact on King's revenues. (See    
synergy question)                                                               

In addition, we believe that the hypothyroidic population is likely to increase 
due to recent peer review articles and the more frequent addition of a thyroid  
test to normal blood tests.                                                     

Q: WHAT IS THE STATUS WITH RESPECT TO A REVISED SUPPLY AGREEMENT FOR CYTOMEL?   

A: [We are currently in late stage discussions with Schering to extend that     
agreement.]                                                                     

Q: WHAT IS EXPECTED TO OCCUR WITH THE SUPPLY CONTRACT FOR TRIOSTAT WITH         
SMITHKLINE BEECHAM?                                                             

A: We have selected a new third party manufacturer and expect that arrangements 
will be finalized shortly.                                                      

Q: DOES JONES OWN ANY OF THE PATENTS TO ITS PRODUCTS?                           

A: Jones does not own any patent.  However, Jones' key products have achieved   
some degree of differentiation through branding and marketing efforts. Jones has
also secured some protection for its products by means of a variety of measures:
bioequivalence barriers, manufacturing barriers, and raw materials sourcing     
hurdles.                                                                        

STRATEGY                                                                        

Q: DOES JONES HAVE ANY ACQUISITIONS IN THE PIPELINE?                            

A: Jones, like King, regularly looks at various acquisition opportunities.      
However, it is our policy not to comment on acquisitions specifically. We do    
expect the combined Company to have even greater resources to pursue significant
acquisitions with greater balance sheet strength and a broader strategic        
platform, and we also expect additional opportunities through product life cycle
management.                                                                     

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SHAREHOLDERS                                                                    

Q: HOW WILL THE PROJECTED GROWTH OF THE NEW ENTITY COMPARE WITH THE PROJECTED   
GROWTH OF THE STANDALONE COMPANIES?                                             

A: Both companies have achieved rapid historical growth. We expect going forward
that part of the growth of the new company will be driven by Altace,            
particularly in light of the recent promotion agreement with American Home      
Products, and also Lorabid and Cortisporin. In addition, we expect Levoxyl,     
Thrombin and Cytomel to contribute significantly to growth in the coming years. 
We believe that the combination of our two sales forces will allow us to achieve
growth in excess of what the two companies could otherwise achieve on their own.
In addition, we will benefit from increased marketing resources to support the  
sales of our pipeline products.                                                 

Q: WHAT IS KING'S STRATEGY FOR CONTINUING GROWTH?                               

A: King intends to focus its marketing efforts on its existing portfolio as well
as that of Jones. In addition, the Company will continue to seek acquisitions,  
and product life cycle management opportunities.                                

Q:  ARE THERE EXPECTED TO BE ANY SYNERGIES IN THE MERGER?                       

A:                                                                              
    -     We think there is a very complementary and synergistic fit between the
two companies                                               
-     After the merger we'll have over 400 sales people. We believe that
       this will allow us to market our existing products more efficiently
which should result in higher sales                         
-     We see cross-selling opportunities for many of our products,      
         including Altace, Lorabid, Cortisporin, Levoxyl, Thrombin and Cytomel
 -     For example, a lot of Levoxyl prescriptions are actually written by
       GP/FPs which is King's key calling point. We think King's 300 sales
         people will be a big addition to the 123 sales people Jones currently
  has marketing its products. Likewise, some of King's products,
          including Altace and Lorabid, are natural sales calls for Jones' sales
people                                                      
   -     Jones also has a strong hospital sales effort, which is a benefit for
       some of King's current products, but more importantly will be great
for the products under development at Medco                 
-     We also expect to achieve modest cost savings as part of the      
       synergies. In addition, King can use the cash from Jones to further
     strengthen our balance sheet or to invest in future acquisitions.

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Q: CAN YOU QUANTIFY THE SYNERGIES?                                              

A. Cost savings will come from elimination of redundant public company expenses 
and other miscellaneous items. Of course, Dennis and Judy Jones are stepping    
down too. Revenue related synergies, we think, will be significant, and may     
contribute in the range of over $30 million in sales annually within a few      
years.                                                                          

Q: WILL THERE BE COST SAVINGS FROM COMBINING MANUFACTURING OPERATIONS?          

A: We do not currently plan to close any plants. Some of Jones' operations are  
capacity constrained, and we should be able to use capacity at King's plants to 
accommodate some of the strong growth of Jones' products. We may also be able to
perform some steps more efficiently at King. The combination of manufacturing   
efficiencies should reduce the capital expenditures of the combined entity.     

Q: WHAT WILL HAPPEN TO THE JONES EMPLOYEES?                                     

A: Dennis and Judith Jones have elected to retire from active management of the 
Company. However, Dennis has elected to remain a consultant to the Company. We  
have very much enjoyed working with Dennis on this transaction and look forward 
to his insight and consultation going forward. We believe that Jones' management
team is very impressive and look forward to their valuable contributions in the 
coming years. Drew Franz, the COO of Jones, will join the board of the combined 
company and will serve as President and CEO of the Jones subsidiary. In         
addition, Mike Bramblett will assume the role of EVP - Business Development.    

Q: HOW WILL EMPLOYEE OPTIONS BE TREATED?                                        

A: The options that are exercisable and in the money will convert upon closing  
of the merger. Other options are not subject to change of control provisions and
therefore will be converted into the options accepted at the deal exchange      
ratio.                                                                          

Q: WHAT WILL BE THE BALANCE SHEET IMPACT OF THE MERGER?                         

A: Jones had about $200MM in cash at the end of March. This cash will further   
strengthen King's balance sheet and give King a significant war chest going     
forward. More importantly, cash flow in 2000 will be approximately $175 million 
for the combined company.                                                       

Q: DOES KING EXPECT TO TAKE DOWN THE REST OF ITS SHELF?                         

A: We continue to focus on strengthening our balance sheet in order to provide  
ourselves with the maximum amount of flexibility to continue with our           
acquisition growth strategy. Consistent with that strategy we will continue to  
review our options with respect to additional capital raisings.                 

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Q: WILL THERE BE ANY RESTRUCTURING COSTS TO THE MERGER?                         

A: We expect to incur certain one-time charges in the quarter that the          
transaction closes. We expect the one-time charges to be in the $25 to $30MM    
range, and are currently working with our accountants to finalize the amount.   

Q: HOW MANY SHARES WILL BE OUTSTANDING AFTER THE MERGER?                        

A: Based on a 1.125 exchange ratio, King would issue approximately 75MM shares  
to merge with Jones. The total pro forma fully diluted number of shares         
outstanding would be approximately 167MM.                                       

Q: HOW MUCH OF THE COMBINED COMPANY WILL THE JONESES OWN AND WHAT ARE THEIR     
INTENTIONS AS SHAREHOLDERS?                                                     

A: At closing, Dennis and Judy Jones will hold approximately 8 million shares of
King which would represent approximately 5% of the pro forma shares outstanding.
They do not intend to sell their stake in the short term.                       

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KING                                                                            

Q: HOW WILL THE CO-PROMOTION AGREEMENT AFFECT THE SALES OF ALTACE?              

A: We expect the sales of Altace to increase significantly as a result of       
promotion by over 1,000 sales representatives from American Home Products.      

Q: DESCRIBE THE CO-PROMOTION AGREEMENT WITH AMERICAN HOME PRODUCTS.             

A: On June 23, American Home Products and King announced a co-promotion         
agreement for Altace in the United States and Puerto Rico. Altace will be       
jointly marketed by AHP and King. AHP has agreed to dedicate 1,000 sales people 
to the promotion of Altace.                                                     

Subject to the terms of the co-promotion agreement, King will pay AHP an annual 
fee based on a percentage of net sales. Additionally, AHP purchased $75 million 
of King registered common stock at a pre-determined market price and paid to    
King an additional $25 million in cash upon execution of the co-promotion       
agreement. AHP will pay an additional $50 million to King upon the FDA's final  
approval of potential new indications for Altace based on the sNDA previously   
filed by King with the FDA. On May 1, 2000, the FDA's Cardio-Renal Drugs        
Advisory Committee unanimously recommended the approval of Altace for additional
indications after new data from the landmark HOPE Study was submitted that      
demonstrated significant reduction of myocardial infarction, stroke, and death  
from cardiovascular causes in patients at risk for such cardiovascular events.  
The Advisory Committee recommendation followed King's submission of an sNDA on  
January 18, 2000, for such new indications.                                     

Q: DESCRIBE THE PRODUCTS BEING ACQUIRED FROM AHP.                               

A: As part of the agreement with AHP, AHP agreed to divest to King its rights in
the U.S. and Puerto Rico to Nordette, an oral contraceptive, and Bicillin and   
Wycillin, two injectable penicillin products. These products have approximately 
$50MM of combined revenues.                                                     

Q: WHAT IS THE STATUS OF FLUOGEN? WHEN DO YOU EXPECT PRODUCTION TO RESUME?      

A: During King's meeting with the FDA on June 9, FDA officials stated that they 
are pleased and encouraged by King's efforts and progress in addressing         
manufacturing issues with Fluogen to date. The FDA officials noted that they    
would continue to work closely with King in an attempt to resolve any remaining 
issues. Further, the FDA officials emphasized the importance of the Influenza   
Virus Vaccine to the public health. Production of Fluogen resumed on April 14.  
We believe that Fluogen will be distributed in a timely manner.                 

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Q: DOES KING HAVE PATENT PROTECTION FOR ITS PRODUCTS?                           

A: King has secured an impressive level of protection for its products by means 
of a variety of measures: exclusive patents, bioequivalence barriers,           
manufacturing barriers, and raw materials sourcing hurdles.                     

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 * * * * * * *

These communications 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.                               

 * * * * * * *

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 King by mail to King Pharmaceuticals, Inc., 501 Fifth      
Street, Bristol, Tennessee 37620, Attention: Investor Relations, Telephone (423)
989-8000.                                                                       

 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 King by
mail to King Pharmaceuticals, Inc., 501 Fifth Street, Bristol, Tennessee 37620, 
Attention: Investor Relations, Telephone (423) 989-8023. 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.

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 425 Filing	Date	First	Last	Other Filings

	12/10/99	3		8-K, S-4
	12/31/99	3		10-K, 11-K, 10-K405
	1/18/00	31
	1/21/00	3		S-3
	3/31/00	3		10-Q
	4/19/00	3		8-K
	5/1/00	31
	6/23/00	20		DEF 14A, 8-K, 424B5
	7/21/00	7
	7/24/00	1		SC 13D/A
Filed On / Filed As Of	7/25/00

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King Pharmaceuticals Inc · 425 · Jones Pharma Inc · On 7/24/00

Filed On 7/24/00 8:03pm ET · SEC File 0-15098 · Accession Number 950144-0-9014

Business-Combination Transaction Communication · Rule 425Filing Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Business-Combination Transaction Communication · Rule 425
Filing Table of Contents