Elan surges on renewed speculation of Lundbeck offer
Published 05/05/2009 | 13:34
Elan, the Irish drugmaker considering selling a stake in itself, jumped as much as 17 percent in Dublin trading on renewed market speculation that Danish drugmaker H. Lundbeck A/S will make a bid.
Elan soared as much as 76 cents to 5.33 euros, the steepest gain since March 26. The stock was up 69 cents to 5.26 euros as of 12 p.m. in Dublin.
Citigroup has been advising Elan since January on options including a merger or sale of a minority stake, the latter being the company’s preferred scenario, Elan Chief Executive Officer Kelly Martin said last month. The shares gained 15 percent March 26, also on speculation of a Lundbeck offer. Elan’s American depositary receipts jumped 20 percent in New York trading yesterday, when the Dublin market was closed for a holiday.
“The Lundbeck rumor was in the market yesterday, and this has come up before,” said Ian Hunter, an analyst at Goodbody Stockbrokers in Dublin.
Lundbeck agreed in February to pay as much as $900 million (€672 million) for Deerfield, Illinois-based Ovation Pharmaceuticals. That deal, Lundbeck’s biggest, makes the likelihood of a tie-up or merger with Elan “a bit of a stretch,” according to UBS analyst Martin Wales.
Ireland’s largest drugmaker needs money for the final and most expensive clinical tests of drug candidates to treat Alzheimer’s disease and to repay $1.1 billion in debt due in 2011.
“The stake would have to be, at an absolute minimum, at least half a billion dollars to make it worth Elan’s time,” Wales said in an interview. “I don’t think Lundbeck’s balance sheet would support that.”
Jonathan Birt, an external spokesman for Elan, and Mads Kronborg, a spokesman for Copenhagen-based Lundbeck, declined to comment.
Elan has said it expects to have $200 million in cash at the end of this year, about half the amount it had as of Dec. 31. The drugmaker last year shelved plans to sell its drug technology division, which Martin has said is valued at more than $1 billion, as global financial turmoil dried up financing opportunities. (Bloomberg)