updated 11/6/2006 9:07:16 AM ET 2006-11-06T14:07:16

Abbott Laboratories Inc. said Monday it will acquire Kos Pharmaceuticals Inc. for $3.7 billion to boost its presence in the lucrative cholesterol-treatment market.

The agreement provides for Abbott to acquire Kos for $78 per share in cash, the companies said in a joint statement. Kos shares closed on Friday at $50.09, making the premium on Abbott's offer nearly 56 percent.

Kos' main products — Niaspan and Advicor — involve versions of the nutrient niacin, which helps boost levels of good cholesterol, or HDL.

Kos is also in late-stage development with Simcor, which combines Niaspan and a generic version of Merck & Co.'sZocor, a widely used treatment that cuts bad cholesterol. Kos' other development projects include an asthma medication and an inhaled form of insulin.

Abbott said it expects the deal to hurt earnings per share in 2007 by 2 cents to 3 cents, and be neutral to positive for earnings in 2008.

Shareholders owning a majority of the shares of Kos' common stock have agreed to tender their shares or have their shares acquired by Abbott, the companies said.

Kos has been bracing for a marketing battle with Merck, which is developing its own niacin-based products.

Merck suffered a setback in September when it announced it would delay seeking approval for a triple-combination product that combines niacin, Zocor and a third ingredient designed to block the facial flushing that is often a side effect of niacin.

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