Elan mulls technologies unit split with $950m flotation
Published 20/04/2010 | 05:00
Irish drug company Elan is again considering a spin-off of its drug technologies unit, with a stock market flotation of the business likely to add up to a $950m (€704m) in enterprise value on the division.
Elan confirmed yesterday that it was contemplating a "separation" of its Athlone-headquartered EDT (Elan Drug Technologies) arm, and said that the move, if undertaken, would create two distinct publicly listed companies -- EDT and Elan BioNeurology. The EDT unit employs close to 500 people here.
The latter would continue to focus on the company's multiple sclerosis medicine Tysabri, and an existing drug development pipeline that includes potential treatments for Alzheimer's.
The group has also announced that its chairman, Kyran McLoughlin -- the former boss of Davy Stockbrokers -- is to retire from his role.
Elan, which reports first-quarter figures tomorrow, had sought buyers for the EDT business back in 2008 and had significantly progressed a potential sale, with private equity bidders including Texas Pacific, Warburg Pincus, Candover and Bain.
But Elan pulled the planned sale due to the credit crunch and its associated unfavourable market impact.
Yesterday, the company said that its two business divisions each represented "vastly different investment propositions, and each generates distinct and on-going capital requirements". A sale would enable Elan to further play down its $1.24bn debt pile.
Ian Hunter, an analyst with Goodbody Stockbrokers, said investors would probably be disappointed if Elan failed to proceed with a sale or flotation this time around.
"The balance would be towards an IPO. Elan will probably let the market decide what the value is," he said, adding that the market backdrop for such a move was now better.
than it was a couple of years ago.
EDT manufactures drugs for companies including Novartis, Pfizer and Sanofi-Aventis, while it also develops drug-delivery technology, such as its NanoCrystal platform which is used to deliver compounds that are not highly soluble in water.
The EDT unit posted a 9pc fall in revenue last year to $276m owing to reduced royalties from some drugs, while its operating profit before other charges declined 11pc to $76.2m.
A flotation of the EDT unit is likely to result in the stock being quoted on the London Stock Exchange and probably in the US. Shares in Elan closed up just 0.5pc, or three cent in Dublin at €5.71.