Galen keeps open mind on merger option

Northern Ireland pharmaceuticals group Galen Holdings is still interested in a merger which would globalise its business and has not ruled out resuscitating the abandoned merger with Dutch group Ferring Pharmaceuticals.

The proposed £1.5 billion merger between Galen and Ferring was called off last month, a victim of the stock market slump in September and October. Galen's chief executive, Mr John King, did not reject the idea of reviving the merger. "I wouldn't rule anything in and I wouldn't rule anything out," he said.

Mr King added that Galen was very disappointed when the merger was abandoned. The proposed merger between the two companies would have required an equity issue in the order of £200 million to give the merged company the minimum 25 per cent free float and that was not considered feasible given the state of the market.

But Mr King emphasised that Galen was interested in the opportunities that a merger would bring. "We would be interested in looking at opportunities similar to Ferring in the future, but it's not a pressing project. We are now reassessing our strategy to see how to go forward," he said.

The abandonment of the Ferring merger meant that Galen has had to take an exceptional charge of £2.73 million sterling into its profit and loss account for the year to the end of September. When that provision is excluded, Galen's pre-tax profits were up 38 per cent to £14.7 million while turnover was up just under 25 per cent at £48.9 million. Sales of ethical pharmaceutical products - which were up 12 per cent - represented two-thirds of sales.

Galen is about to apply for its first product licences for a number of hormone replacement therapy products, including an intravaginal ring which can deliver up to three months' supply of hormone replacement.

"We'll start to move towards the market place with that product shortly," said Mr King.

The results were broadly in line with market forecasts, but the weakness in the London market sent Galen shares down 29p to 392 1/2 p although trading volumes in the tightly-held stock were very low.

Shareholders are to receive a final dividend of 0.88p, bringing the total payout for the year to 1.32p per share or a total of £1.6 million.