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Irish Drug Company Elan to Buy Dura

Pharmaceuticals: The $1.8-billion deal with San Diego firm would contribute to Dublin concern's expansion.

September 12, 2000|From Reuters

Fast-growing pharmaceutical company Elan Corp. said Monday that it was boosting its U.S. presence through a $1.8-billion stock deal to buy San Diego-based Dura Pharmaceuticals Inc.

Dura markets and sells prescription products that treat infectious diseases and respiratory conditions.

Elan, whose headquarters are in Dublin, Ireland, and whose U.S. operations are based in San Diego, said the deal would add $300 million in revenue in 2001 and double the size of its U.S. sales force to more than 1,000 representatives.

Chief Executive Donal Geaney said the company aimed to double annual revenue to $2 billion by 2003 and that the deal would be a significant step along that road.

Elan is expanding from a drug delivery company to a pharmaceutical group specializing in areas such as neurology and pain management.

Analysts said Dura should be a good fit with Elan, noting that it too had started as a drug delivery company before widening its horizons.

"The deal brings Elan into sales of antibiotics and also adds to their drug delivery business," said Joan Garahy of Dublin brokerage Goodbody. She said the price, at about six times sales, was in line with the industry norm.

The purchase of Dura is the third acquisition announced this year by Elan and would give the Irish company new therapy lines, including treatments for respiratory illness as well as antibiotics. Elan aims to join the ranks of the world's major drug makers by developing and selling its own medicines.

The enlarged sales force would help Elan market new products for which it is awaiting regulatory approval.

Elan is awaiting U.S. regulatory clearance for its Ziconotide chronic pain treatment and Myobloc, used in the treatment of dystonia, a muscle spasm condition.

American depositary receipts for Elan fell $3.19, or 6.1%, to close at $48.94 on the New York Stock Exchange.

Dura shares rose $3, or 11%, to close at $31.63 on Nasdaq.

Under the terms of the deal, Dura shareholders would receive 0.6715 Elan ADR for each Dura share. Based on Elan's closing price Friday of $52.13, this amounts to $35 a share, a 22% premium over Dura's closing price of $28.63.

The deal, which has been approved by the boards of both companies, is expected to close late in the fourth quarter and to add to Elan's earnings in 2001.

It is subject to regulatory and shareholder approval and other conditions, the companies said.

Dura would be Elan's second major acquisition in recent months, following the $575-million stock deal to buy Liposome earlier this year. That purchase took Elan into the treatment of tumors.

Dura had sales of $301 million last year, up from $199 million in 1998. More than two-thirds of its revenue came from pharmaceutical sales.

When Dura reported earnings in January, it had $274 million in cash. It posted a profit of $30 million, or 66 cents a share, in 1999, compared with $2.7 million, or 6 cents, in 1998.

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Expanding Horizons

Elan's stock price has risen 65% so far this year as the company has sought to expand through acquisitions. Its purchase of San Diego-based Dura Pharmaceuticals would add to its product line.

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Elan ADRs (ELN), weekly closes and latest on the New York Stock Exchange:

Monday: $48.94, down $3.19

Source: Bloomberg News

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