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Sun, April 27, 2003.
Elan shares up after bond buyback speculation

27/04/03 00:00


By Ed Micheau

Shares in Elan Corporation gained over 15 per cent last week on speculation that the company had gone back into the market to buy back some of its bonds.


In January, the share price jumped 12 per cent after it emerged that the company had bought back $400 million of its bonds at a discount in excess of 20 per cent.

The buyback reduced Elan's year-end liability to about $850 million. Bondholders have an option in December to exercise a `poison-put' option on securities they ac-quired five years ago.

Elan is in the closed period before it reports results for the first quarter of 2003. But it is expected to update the market on a range of issues at the results presentation on Wednesday, April 30.

A spokesperson for the company denied rumours emanating from the United States that it was close to doing a deal with King Pharmaceuticals in advance of a court hearing on May 15.

Elan is trying to force King to proceed with the $850 million acquisition of the Irish company's prescription drugs Skelaxin and Sonata.

Sources in the US speculated last week that King did not have a case to answer and that it wanted to settle with Elan in advance of a court hearing.

"There has been no contact between Elan and King," the spokesperson said.

Elan may also update the market on the impending sale of its US drug delivery business which could fetch up to $600 million. The business, which has several units, could be sold in one block.

Canadian company Biovail and US company Andrx are among the possible bidders.

Elan's drug delivery business was voted the best of its kind in the US last year by an industry magazine.