King Pharma options up on takeover talk

By Doris Frankel

CHICAGO (Reuters) - King Pharmaceuticals Inc (KG.N: Quote, Profile, Research, Stock Buzz) option volume surged on Friday fueled by speculation that the drug maker may be acquired, according to several options analysts.

Pfizer Inc (PFE.N: Quote, Profile, Research, Stock Buzz), the world's biggest drug maker, was touted as a possible suitor, according to one analyst.

"There are rumors that Pfizer might be very interested in acquiring King Pharmaceuticals," said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.

Both Pfizer and King were not immediately available for comment.

King's top two drugs are Altace, a treatment for high blood pressure and the muscle relaxer Skelaxin.

The company's shares rose 2.42 percent, or 25 cents, to finish at $10.59 on the New York Stock Exchange.

The stock of the Bristol, Tennessee-based drug maker has fallen from its year high of $22.10 in early May. In September a U.S. federal appeals court ruled that King's patent for Altace was invalid, opening the door to competition from cheaper generic versions.

"King Pharma call volume and volatility are up on renewed buyout chatter," said Paul Foster, options strategist at Web information site theflyonthewall.com in Chicago.