PLANS by Elan Corporation for an agreed takeover of the British pharmaceutical group Medeva have collapsed after the two groups failed to agree on a price. Elan was never confirmed as the party with which Medeva was involved in takeover talks but the view in the markets was that Elan - attracted by Medeva's distribution capacity in Europe - was the potential bidder.
There was some speculation yesterday that having rebuffed in its efforts to out together a recommended bid, Elan might now make a hostile bid for Medeva. If Elan did embark on such a move, it would represent a fundamental change in strategy for the Irish group which has built its expansion in recent years on friendly takeovers where the management of the acquired company remains on to continue running the company under Elan's control.
But Medeva yesterday withdrew from the discussions and rejected what it described an an "opportunistic" price for the company. The end of the takeover talks with Elan had a devastating effect on the Medeva, which fell 36p to 134p sterling. Analysts had speculated on a bid at between 180p and 200p sterling a shares, valuing Medeva at just over €1 billion. This collapse in the Medeva share price is one factor that might persuade Elan to make a hostile bid, especially as many Medeva including Irish Life - which owns 5 per cent - may be angry at the Medeva's board's refusal to put the Elan offer to them.
"While the board had no specific price target for agreeing to be bought, the bidder didn't come anywhere near an acceptable offer," said Medeva finance director, Mr Garry Watts.
Medeva said it was prepared to recommend an offer which took account of its research strength, management and products under development. In the event, the proposal received turned out to be an opportunistic price which the board, advised by Lazard Brothers, had no hesitation in rejecting," the company said.
Medeva chief executive Mr Bill Bogie did not detail the terms of the offer but "It was clearly less than the levels the market was expecting." Mr Bogie said Medeva had been talking to only one company and no other offers were on the table.
Mr Bogie said the main sticking-point in the talks was the valuation of Medeva's pipeline of drugs under development, including Hepagene, a hepatitis drug which it hopes to market next year.
"We did not get an offer that took account of the full value of Medeva, the net integration value of what the business would have been worth when they came together and valuing the pipeline at a level where we would value it," Mr Bogie said.
"We were approached. We got into these discussions because we thought we had someone who was prepared to pay the value we see in the company now and the partner had good opportunities in going forward and enhancing value," he said. "That has not happened so we ended them as quickly as possible, he added."
