Abbott Laboratories announced on Monday that it will purchase Kos Pharmaceuticals Inc., to strengthen its presence in the lucrative cholesterol treatment market.

The deal valued at $3.7 billion or $78 per share represented a 56 percent premium on Friday's closing price for shares of Kos at $50.09. The New Jersey based Kos produced lipid-management-product known as '˜Niaspan' that raises good-cholesterol level and Advicor, an advance cholesterol treatment.

In speaking with Abbott, it is our sense that the company is excited to expand its lipid franchise and is optimistic about the prospects for fixed-dose combination therapies, wrote Banc of America Securities analyst Glenn Novarro in a client research note.

The lipid management market is currently the largest pharmaceutical segment growing at an accelerated rate. Niaspan generated more than $400 million per annum in sales last year.

"Kos Pharmaceuticals is an excellent strategic fit for Abbott, both scientifically and commercially, said Abbott chairman and chief executive Miles White. This acquisition expands Abbott's presence in the lipid management market and will provide several on-market and late-stage pipeline products. Kos also complements our existing commercial and research and development expertise, and increases our R&D spending capacity.

Kos stated that a majority of its shareholders had agreed to tender their shares or have their shares acquired by Abbott.

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