Elan shareholders approve new drug deal

Elan shareholders have approved a revamped version of the company's contentious agreement to sell two drugs to US pharmaceutical firm King.

The deal, which will raise more than $750 million (€638 million) for Elan, will increase the troubled firm's cash balances to $1.3 billion, allowing it to meet all debt obligations due this year without resorting to an equity issue.

Elan company secretary Mr Liam Daniel said yesterday that the sale of Skelaxin and Sonata to King would give the company more "flexibility" on its future financial obligations.

When asked if Elan would now consider buying back more of its own bonds in order to reduce a $1 billion liability due at the end of the year, Mr Daniel acknowledged that the company's options in that regard had been increased.

Elan was now in "a stronger negotiating position", he said.

When the King deal is completed, Elan will have surpassed i ts initial target of raising $1.5 billion in asset disposals before the end of 2003.

Mr Daniel said the company had succeeded in gaining full value for all of its divestments over the past year rather than embarking on a "fire sale".

He said Elan would continue to pursue its recovery plan over coming months. This would include the termination of more joint ventures, he added.

Shares in Elan gained 40 cents to close at €6.90 in Dublin last night. In New York, where the stock is mostly traded, it finished down 0.87 per cent at $8.