Elan said yesterday that it would take a $55 million (€44.8 million) charge in its first-half accounts to provide for estimated liabilities in relation to a regulatory investigation into its accounts and legal cases against it.

The provision, which is toward the lower end of market expectations and will be included in the results which are due to be filed this week, relates to the two-year old US Securities and Stock Exchange (SEC) investigation into the company's accounts and the related shareholder class-action lawsuits.

Analysts said the announcement suggested that, together with insurance costs which the company previously indicated would come to around $50 million, Elan was facing costs of around $100 million, which it should be able to meet from its existing resources.

"Given that the company is in the final stages of negotiation with the SEC on the investigation and, we assume, is concurrently in contact with the lead plaintiffs in the class action, this reserve would imply a total settlement in the $100 million-plus region," Goodbody Stockbrokers said.

"We believe this will be seen as a positive conclusion to the litigation overhang."

Davy described the news as "a very good result for Elan's balance sheet" and said it should be received positively by the market.

Shares in Elan rose by 35 cents, or 1.85 per cent, to €19.30 in Dublin. On the New York Stock Exchange, Elan's main market, they added more than 2 per cent to $23.90 in early trading before giving up ground later in the afternoon. The shares ultimatately closed $0.43, or 1.84 per cent, lower at $22.92.

Analysts noted the company, which had net cash of $677 million on June 30th, had sufficient liquid resources to deal with a fine or litigation exposure of this order.

Elan said yesterday that it was still in discussions to resolve the SEC investigation and the shareholder lawsuits "as soon as practicable".

The company had previously said it expected the inquiry to be wrapped up by the end of September.

The SEC probe, along with the attendant class-action lawsuits, have overshadowed the company since 2002 when its share price collapsed amid concerns about its accountancy practices and setbacks to important pipeline products.

Analysts said resolution of the legal and accounting issues would underpin Elan's share price, by removing the uncertainty hanging over the company and the distraction to Elan's management team, headed by chief executive Mr Kelly Martin, brokers said.

Davy also noted that it would remove any impediment from corporates interested in buying Elan which could underpin the share price on the back of any weakness.