PHILADELPHIA May 31 Irish biotechnology firm
Elan Corp ELN.I is in advanced discussions to sell a minority
stake to Bristol-Myers Squibb Co (BMY.N), a source familiar
with the situation said on Sunday.
An agreement on the sale of the minority stake could come
as early as this week, said the source, who declined to be
identified by name because they did not have authorization to
speak to the media.
Elan is also in talks with a second suitor, but the status
of those discussions was unclear.
Selling a minority stake could be the first move in a
multistep transaction to sell Elan outright, the source said.
Elan and Bristol-Myers both declined to comment.
In January, Elan hired Citigroup to conduct a strategic
review of its business, which it said at the time could lead to
a sale or merger of the company.
Elan was under pressure at the time from investors critical
of Chief Executive Kelly Martin's leadership and the state of
the biotech company, which was burning through cash at a rapid
rate. In its most recent quarterly earnings report it posted a
net loss of almost $103 million.
Martin told reporters in April that a partnership, rather
than a merger, may be Elan's best option.
"The best option for Elan would be to have a partnership
with a large pharmaceutical company," Martin said at the time.
Biotechnology company Biogen Idec Inc (BIIB.O) and Elan
jointly market the multiple sclerosis drug Tysabri. Drugmaker
Wyeth WYE.N, currently being acquired by Pfizer (PFE.N), and
Elan are jointly developing the experimental Alzheimer's drug
bapineuzumab. These are currently Elan's two most important
Bristol-Myers or a company unrelated to Elan may have
difficulty making a full acquisition for the Irish biotech
company because of those drug partnership agreements.
Biogen and Wyeth have change of ownership clauses that
allow them to buy out the two drugs, which together make up the
bulk of Elan's value.
Earlier this month, Danish pharmaceutical group Lundbeck
(LUN.CO), which had been rumored to be eyeing Elan, ruled
itself out as a possible buyer of Elan.
Lundbeck said tight credit-market conditions made it
impossible to buy a company the size of Elan. Elan has a market
value of about $3.6 billion, while Lundbeck's market
capitalization is roughly $4.4 billion.
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