NJ-Based Knoll Pharmaceuticals Sold to Chicago's Abbott Labs for $7 Bil

MT. OLIVE, NJ-Just when you thought the M&A activity had quieted down within New Jersey’s pharma industry, another big deal comes along. North Chicago, IL-based Abbott Labs has acquired Knoll Pharmaceuticals, based here, from BASF AG, Germany’s biggest chemical concern. The price tag in the all-cash deal is $6.9 billion.

The impact on Knoll’s New Jersey and worldwide operations isn’t immediately clear but figures to sort itself out between now and the end of the first quarter of ’01, when the contract is slated to be completed pending regulatory review. Knoll has almost 800 employees at its Mt. Olive HQ, plus another 200 at a manufacturing facility in nearby Whippany, NJ. Worldwide, the company has 10,700 employees, according to a company insider.

The two companies are expected to put together an integration plan over the next few months, according to the Knoll executive, “but Abbott will ultimately make the decisions.”

And industry observers generally agree that the move is a good one for all concerned. Abbott Labs, for example, has mostly been a healthcare products producer longing to be a bigger player in the pharma business. The company had attempted to buy Alza, a drug company, last year. Abbott will now gain some of that clout with the acquisition of Knoll, which has been rolling out such products as the promising new rheumatoid arthritis drug, D2E7; Meridia, an obesity treatment drug; and Synthroid, which is used to treat thyroid problems.

D2E7 alone is projected to have potential sales of more than $1 billion. Knoll’s overall 2000 sales are projected in the $2.1 billion range, according to the spokesperson.

Abbott, with its marginal pharma activities, and Knoll, a mid-sized company, are expected to be better able to compete in this age of mega mergers and pharmaceutical giants. BASF, meanwhile, has been longing to return exclusively to its roots in specialty chemicals, including pesticides, herbicides, oils and gasses. As a stand-alone, or as a mismatched component of BASF, Knoll was considered too small to compete despite its recent record of innovation.