12:00 AM
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Feb 11, 2002
 |  BioCentury  |  Finance

Elan takeout: Not for faint of heart

With $10.2 billion erased from its market cap since Jan. 17 and $1.6-$1.7 billion in product sales projected for this year, Elan Corp. plc would appear vulnerable to a takeover bidder in search of adventure. Indeed, at Friday's close of $14.80, ELN's market cap of $5.1 billion is below its enterprise value of $5.7 billion (market cap minus cash and marketable securities of $2.36 billion plus debt of $2.99 billion).

No suitor had appeared publicly as of last Friday, perhaps reflecting the counter-balancing issues surrounding the company's accounting issues. Given the climate engendered by the Enron scandal, no one may want the headaches of buying a company that the SEC is investigating (see BioCentury Extra, Thursday Feb. 7).

On a more fundamental basis, the company's major franchise in CNS drugs consists of relatively small products by conventional pharma standards. And bargain basement prices do not necessarily constitute a rationale for M&A, as dilution and product/pipeline similarity must be...

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