Irish pharmaceutical company Elan has sold its entire stake in rival Warner Chilcott for around £57.3 million (€83.28 million).
Dublin stockbroker Davy placed Elan's holding of 7.12 million shares, or nearly 4 per cent of Warner Chilcott, at 805 pence per share in London in a deal that was said to have been oversubscribed.
Elan capitalised on a recent sharp rise in the share price amid hopes of a takeover battle. Warner Chilcott, formerly known as Galen, has received three bid approaches from private equity groups.
Three weeks ago, it emerged that the company had received an approach that could lead to an offer of 800p per share from a consortium understood to comprise Goldman Sachs's private equity arm, Blackstone Group and Texas Pacific. A second approach was subsequently made.
Last week, a third consortium - revealed yesterday to have been formed by US private equity groups Bain Capital, Carlyle and Thomas H Lee - joined the fray. It has begun due diligence enquiries, Warner Chilcott said yesterday.
Elan acquired its 3 per cent stake in Galen through the Northern Ireland group's $296.5 million (€240.21 million) acquisition of Warner Chilcott in 2000, a company Elan had spun off in 1997 - the same year Galen Holdings went public.
The price Elan secured yesterday was slight discount to the 815 pence at which Warner Chilcott closed on Tuesday.
"Elan has clearly taken the decision that the risk-reward balance is such that they should be selling now rather than waiting for the final offer to arrive," said Mr Max Herrmann, an analyst with ING Financial Markets.
"I still think it will go for above 800p (a share) if it is sold to private equity and they could easily manage 860p."
Elan, which recently announced plans to take a charge of $55 million in its interim accounts to settle class action suits and a Securities and Exchange Commission investigation, said yesterday it would use the money to pay down debt.
Last year, another takeover offer for Warner Chilcott fell through after the bidder - named by industry sources as Barr Pharmaceuticals - pulled out.
Warner Chilcott's fortunes have ridden a rollercoaster in recent years, with the shares hit by concerns about the safety of hormone replacement therapy and the threat of generic competition.- (Additional reporting, Reuters)
