ELAN SHARES rose as much as 9 per cent to the highest level in more than two months yesterday on speculation that Pfizer, the world’s biggest drugmaker, may buy the Irish company.

The stock rose 36 cent, or 6 per cent, to €6.36 in Dublin trading, the highest value since October 21st.

Options trading surged to 22 times the average in the US yesterday. In US trade last night, the stock had surrendered its early gains and was trading around 3.9 per cent weaker.

Elan suffered a 72 per cent drop in share value last year amid concerns about the safety of its Tysabri multiple sclerosis drug and its ability to pay back $1.15 billion of debt due in 2011.

The stock decline means Elan is now “at an attractive price”, Ian Hunter, an analyst at Goodbody Stockbrokers in Dublin, wrote in a note to clients.

“The current market speculation has Pfizer as the potential suitor,” Hunter said. “We believe Elan would be too small a target for a company of Pfizer’s size.”

Mr Hunter said that even Elan’s partner in the Tysabri programme, Biogen Idec, might be a more attractive proposition for the US drug giant. Biogen put itself on the market last year without success.

He noted that Elan had been the subject of takeover speculation on several occasions in recent years but that nothing had ever come of it.

Earlier this month, the Financial Times said Pfizer may “acquire a large rival drug company to improve its financial health”, citing an interview with Jeffrey Kindler, the New York-based drugmaker’s chief executive.

Investors have said Pfizer could build on its extension into biological medicines by buying Amgen, the world’s largest biotechnology company by sales, the report said.

Pfizer spokesman Ray Kerins declined to comment on market rumour or speculation yesterday.

A spokeswoman for Elan Mary Stutts remarked that the company doesn’t comment on market speculation. – (Bloomberg)