United Drug shares leap 5% as listing move announced

SHARES IN United Drug rose by almost 5 per cent to €2.30 yesterday after the company increased its full-year guidance for the year and announced potential plans to switch its stock market listing to London.

In a statement yesterday the company said it believes that a FTSE UK index inclusion “would result in a further increase in UK and international investor awareness of United Drug”. A more detailed announcement is expected in the next few weeks.

Speaking to The Irish Times, United Drug chief executive Liam Fitzgerald said that 70 per cent of United Drug’s profit derived from overseas markets, while the UK is the company’s single-biggest market. Ireland represents about 30 per cent of profits.

“As well as being a UK index, the FTSE is also a very international index, and would give us a much wider investment profile.”

The fact there are few peer companies in the FTSE 250 would also enhance the firm’s profile “above and beyond its market cap”.

Mr Fitzgerald said it was too early to say whether United Drug would consider maintaining a secondary listing in Dublin, as the potential move to the FTSE is still under discussion.

Any listing switch would not impact on United Drug’s Irish business, he said. Some 600 of the workforce are employed in Ireland, mainly at its headquarters in Sandyford, south Dublin.

A number of Irish plcs, including CRH, Elan, and Greencore, have switched their primary listings from Dublin, though CRH and Elan still maintain a secondary listing in Dublin.

Because a London listing requires a minimum level of share liquidity, United Drug is effectively obliged to de-list from the Irish stock exchange to gain admission to the FTSE. In contrast, CRH already had significant liquidity in London and did not have to de-list from Ireland when it moved.

United Drug represents about 1 per cent of the Irish Stock Exchange.

Irish Stock Exchange chief executive Deirdre Somers said that while it is “very disappointing” when a company leaves the stock exchange, companies have to make their own decisions.

She said the exchange had established a cross-broker group to examine any issues currently facing it.

“One issue that has been identified is the issue of scale. While Ireland has a high level of entrepreneurial activity, many Irish companies remain at a small scale,” she said.

“A disproportionate amount of Irish companies engage in a trade sale at a key stage in their development. We need to identity high-potential start-ups at an early stage.”

United Drug yesterday increased its full-year earnings per share growth guidance from 4-8 per cent, to 8-10 per cent, on the back of a strong performance in the third quarter.

The company, which last month announced the acquisition of two companies in the pharmaceutical outsourcing and communications fields, said revenues and profits for the nine months to June 30th, 2012, were ahead of the same period last year.