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Glaxo unit buys Breathe Right maker

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By Rick Stouffer
Monday, Oct. 9, 2006

GlaxoSmithKline's Pittsburgh-based Consumer Healthcare unit has acquired for $566 million cash CNS Inc., maker of Breathe Right nasal strips and FiberChoice dietary fiber supplements.

The deal values Minneapolis-based CNS at $37.50 per share, a 31 percent premium over CNS's stock closing price last Friday. The deal is expected to close early next year.

"This outstanding business provides a greater global growth opportunity for GSK," said GlaxoSmithKline Consumer Healthcare President John Clarke, in a statement. "CNS is a well-managed company. Its two major brands, Breathe Right and FiberChoice fit our growth strategy and are great additions to our portfolio." GlaxoSmithKline Consumer Healthcare, maker of such products as Tums, Aquafresh toothpaste and Nicoderm CQ, said that CNS's one-year sales through June 30, totalled $118.5 million, up 18 percent from one year earlier. Some 86 percent of the company's revenues are generated in the United States.

Breathe Right has delivered 12 percent and FiberChoice 54 percent compound annual growth rates in sales, respectively, over the past three years. For GSK, the transaction will be neutral to earnings in 2007, and add to earnings in 2008.

"This transaction will deliver excellent value to our shareholders," said Marti Morfitt, CNS' chief executive, in a statement.

Breathe Right strips, which open nasal passages for better breathing are the leading nasal strip. The strips fit on the outside of the nose and are designed to treat congested breathing due to colds and allergies. Athletes also are big users of the nasal passage opening product.

Both Breathe Right and FiberChoice are supported by patents in the U.S. and key markets worldwide, and by scientific evidence for their product claims, CNS said.

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