Galen ISEQ exit to cost Barr €2bn

GALEN’S US-based takeover suitor Barr Laboratories will have to pay over €2 billion, as the Northern Irish pharmaceutical company becomes the latest company lining up to quit the Irish Stock Exchange.

Falling share prices have led to an exodus from the exchange, with more than a dozen companies including Smurfit, Eircom, Green Property and Riverdeep bought out, Sherry Fitzgerald on the way out the door, and Barlo management pushing for delisting. Even some Glanbia shareholders see sense in reverting to a co-op structure.

Galen took the stockbroking community by surprise with its one-paragraph statement early yesterday.

"The board of Galen Holdings Plc notes the recent rise in the company's share price," it said.

"The company is currently in preliminary discussions which may or may not lead to an offer for Galen Holdings Plc. Shareholders are advised to take no further action at this time. A further announcement will be made in due course."

New York-based Barr Laboratories, a speciality pharmaceutical company which counts the US military among its clients, is said by sources to be in talks with Galen. It is expected a deal could be concluded before September.

The news set the shares alight, and, by lunchtime yesterday, a further gain of 15% had been made, pushing the share to 10.50, well ahead of a 2003 low of 4.45 on March 5.

Davy analyst Jack Gorman said it was hard to say when any deal would be completed, but noted that third-quarter results are scheduled for August 6, and that this may provide the next date for newsflow.

Galen founder Allen McClay and chairman John King together own about 17% of the company as of December, making them the company's biggest shareholders, according to Bloomberg data.

If the company is bought for more than 2bn then the pair will share in a 340m bonanza.

A takeover would also result in a much-needed 60m cash boost for struggling rival Elan, Galen's fourth-biggest shareholder, with a 3.9% stake.