Claim Forest mulling Elan bid
Elan, which has a market capitalisation of nearly $7bn (€5.2bn), put itself up for sale last week in an effort to fend off a hostile offer from US investment firm Royalty Pharma.
Forest is among several mid-sized drugmakers considering an offer for Elan, sources said, although details of the auction have not been made public.
The discussions are at an early stage and Forest may decide against making an offer.
Shares of Forest closed 0.65% higher — at $41.84 — on the New York Stock Exchange on Wednesday, valuing the company at about $11.1bn.
Elan’s New York-listed shares rose by 2.7% to end at $14.15, on the same day.
Representatives of Forest, Elan, and Royalty Pharma all declined to comment.
News of Forest’s interest came a day after Royalty Pharma dropped its hostile bid for Elan, worth up to $8bn, leaving the Irish company free to court other suitors.
Corey Davis — an analyst with the New York-based Jefferies & Co — 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 noted.
Forest already has a relatively low 22% tax rate because it has an Irish subsidiary, he said.
Mr Davis said fast-growing companies would have the most to gain by buying Elan, to get closer to the Irish tax rate of 12.5%. “The benefit (of becoming an Irish company) is that all future products, ones not yet approved, could be owned in Ireland and have a lower tax rate.”
A potential deal comes at a time when Forest is at a crossroads. The company recently agreed to add a representative of Mr Icahn to its board, averting a new proxy battle.
Mr Icahn is Forest’s second-largest shareholder, with a stake of about 11.5%.
— Reuters
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