Deal speculation drives Galen up

Galen Holdings' share price has been driven upwards in the past 24 hours on the back of industry speculation linking it to a possible deal with the US pharmaceutical and healthcare group Bristol-Myers Squibb for the latter's dermatology business.

Shares in the Northern Ireland pharmaceutical group climbed steadily yesterday on the London Stock Exchange to close 3 per cent higher at 660 pence sterling last night.

The group's shares settled at €9.68 on the Dublin Stock Exchange after strong gains earlier this week. Galen reported record first-quarter results on Wednesday, which showed that its pre-tax profit soared in that period to £12.9 million (€21 million).

Neither Galen nor Bristol-Myers Squibb have commented on any prospective deal between the two pharmaceutical groups. The Northern Ireland group has made no secret of its US acquisition ambitions and Bristol-Myers has come close to selling its dermatology business before.

It has been reported by the Financial Times newspaper that the US group had agreed to sell this division to Britain's Bioglan Pharma but the British group was unable to raise the necessary finance to secure the takeover.

Bristol-Myers Squibb manufactures and distributes medicines, beauty care, nutritionals and medical devices from the US to Britain. Last year the group's sales topped $19.4 billion (€22.2 billion), boosted by the sale of its Clairol hair care business to Procter & Gamble.

Its dermatology division, which manufactures and develops a products for inflammatory diseases, excessive hair growth, pigmentation, psoriasis and wound healing, is now for sale with an estimated $765 million price tag.

Market analysts believe Bristol-Myers's US dermatology business would be a good fit for Galen, provided the price was right, but that the entire division might not sit so comfortably with the Northern Ireland group's immediate ambitions.

Mr Jack Gorman, analyst with Davy Stockbrokers in Dublin, said: "The US product suite would represent a comfortable fit within the Galen portfolio and Galen has publicly stated before that it is looking for new dermatology products."

Galen maintains it would have the balance sheet to support a $700 million deal. It is currently sitting on a £250 million war chest and is likely to see a further cash injection when it divests the rest of its clinical trials business.