Exclusive: Forest mulls bid for Irish drugmaker Elan - sources

Wed Jun 19, 2013 4:30pm EDT
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By Jessica Toonkel and Soyoung Kim

NEW YORK (Reuters) - Forest Laboratories Inc, the specialty drugmaker that counts investor Carl Icahn as a major shareholder, is among a handful of companies interested in bidding for Irish drugmaker Elan Corp Plc, two people familiar with the situation said.

Elan, which has a market capitalization of nearly $7 billion, put itself up for sale last week in an effort to fend off a hostile offer from U.S. investment firm Royalty Pharma.

Forest is among several mid-sized drugmakers considering an offer for Elan, the people said on Wednesday. They asked not to be named because details of the auction have not been made public.

The discussions are at an early stage and Forest may decide against making an offer, the people cautioned.

Shares of Forest closed 0.65 percent higher at $41.84 on the New York Stock Exchange on Wednesday, valuing the company at about $11.1 billion. Elan's New York-listed shares rose 2.7 percent to end at $14.15.

Representatives of Forest, Elan and Royalty Pharma declined to comment.

News of Forest's interest comes a day after Royalty Pharma dropped its hostile bid for Elan, worth up to $8 billion, leaving the Irish drugmaker free to court other suitors.

Jefferies & Co analyst Corey Davis said Forest could achieve a lower tax rate if it were to buy Elan and become domiciled in Ireland, but the tax advantage would not be as substantial as some of the other possible suitors. The tax advantage is the main reason to buy Elan because it is not developing any significant drugs, he said.   Continued...