Pfizer buys King Pharmaceuticals for $3.6bn

Pfizer is the world's largest pharmaceutical company by revenue

Drugmaker Pfizer has agreed to buy smaller rival King Pharmaceuticals for $3.6bn (£2.3bn) in cash.

Pfizer is paying $14.25 per share for King, a premium of 40% to King's closing share price on Monday.

King has struggled in recent years as patents on several of its key drugs have expired or been thrown out.

Pfizer said the deal would add about two cents a share to its profit in 2011 and 2012, and three to four cents per share in each of the next three years.

The boards of both companies approved the deal.

King's shares ended Tuesday trading up $3.99 or 39% to $14.14. Pfizer advanced 0.5%.