Elan considers splitting company into two entities

IRISH BIOTECH group Elan is assessing the prospects of splitting the company into two listed entities. It said yesterday it had “decided to explore the possibility of a separation of its Elan Drug Technologies (EDT) business”.

The announcement effectively resurrects a 2008 plan to hive EDT from the company’s bioneurology business. At that time the company opted for an auction of the business instead of its flotation. The company valued the business at around $1 billion, but it abandoned the exercise when credit markets dried up.

The entire company is currently valued at around €3.3 billion.

In a statement yesterday, Elan said its exploration of various options would assess the impact on shareholder value and market conditions. It has not set down a specific timetable, and would say only that it expected to make a decision “in the coming months”.

It said both businesses were now profitable on an operating basis. “Each represents vastly different investment propositions, and each generates distinct and ongoing capital requirements.”

The EDT business concentrates on improving methods of drug delivery. It was the core business established by Don Panoz in Athlone in 1969.

The bioneurology business grew from the acquisition of Athena Neurosciences for $600 million in stock back in 1996 by former chief executive Donal Geaney. Most of the company’s pipeline in areas such as Alzheimer’s disease and multiple sclerosis have evolved from science acquired in that deal.

A spokeswoman for the company said it was “contemplated” that both businesses would continue to be based in Ireland.

Goodbody analyst Ian Hunter said a separate listing for the EDT business would allow Elan to cut its borrowings. “If EDT is spun off, it will probably find it easier to raise capital on the markets to fund further expansion,” Dr Hunter said.

The company also announced yesterday that chairman Kyran McLaughlin will retire from the board once a successor has been found. – Additional reporting, Bloomberg