Athlone-based Elan Corporation has been mooted as a possible bidder for British pharmaceuticals group Medeva, which announced yesterday that it was in talks that could lead to a recommended cash offer for the company.
Shares in Medeva, which fell after merger talks with rival Shire Pharmaceuticals collapsed in July, rose by 24 per cent to close at 163.5p sterling on the news. Industry sources said Elan might be a possible bidder for Medeva which, at yesterday's closing price, was valued at £558 million sterling (€854 million).
However, other industry sources were sceptical that an offer was likely. "Maybe they have been forced into an announcement by a non-strategic buyer building up a big interest but I don't see anything changing. They have been in and out of talks with people for a long time," one source said.
Mr Philip Molloy, pharmaceutical analyst with ABN Amro in Dublin, said Medeva's main attraction for Elan is its European sales force. The company has a marketing framework in Britain, Spain, France and Belgium, as well as the US.
"It would give Elan critical mass in terms of its sales force across Europe, an area it wants to build up and which is difficult to grow organically," he said.
However, Medeva's existing drugs and its future pipeline of drugs were considered less attractive, Mr Molloy said. Sales of its key drug, methyl phendiate, used to treat hyperactive children, collapsed in the first half, hitting profits and triggering a 46 per cent slump in the company's share price.
Indeed, shares have plunged by around two-thirds over the past two years as investors grew disenchanted with Medeva's strategy, leaving it vulnerable to a take-over.
In July, it emerged that Medeva had held merger talks with British-based Shire but they fell through, after they failed to agree on a price, according to industry sources.
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)