Shares in Warner Chilcott surged by 15 per cent in London yesterday after the company said it had received a bid approach valuing it at £1.47 billion (€2.16 billion) from a consortium of private equity houses.

The Portadown-based company, formerly known as Galen, said its board, with the exception of chief executive Mr Roger Boissoneault, was considering the 800p per share cash approach, the second in 14 months.

It was not clear last night who had made the approach but speculation centred on the US. Sources said the consortium included The Blackstone Group, but another US buyout specialist Kohlberg, Kravis, Roberts & Co is not thought to be involved.

A Warner Chilcott spokeswoman said that Mr Boissoneault was not involved in the approach but, given the nature of the bid, the board had decided to exempt him from their deliberations since he might be approached at a later stage.

Industry analysts said a private equity buyer was likely to want to retain the company's chief executive to help manage the business going forward.

"The whole strategy is Boissoneault's baby. In terms of where they go in the future, I think Boissoneault is going to be key to unlocking further value," one UK analyst said.

Promising a further announcement in due course, the Warner Chilcott board noted the approach they had received was preliminary in nature and subject to various pre-conditions, including financing and due diligence.

Shares in the company added 98.5p, or 15.2 per cent, in London to 746.5p on the news but remained shy of the 800p level until there is greater certainty that an offer will be forthcoming, analysts said.

Aside from Mr Boissoneault, Warner Chilcott's board includes executive chairman Dr John King, chief financial officer Mr Geoffrey Elliott and three non-executive directors, Dr Harold Ennis, Mr David Gibbons and Dr Michael Carter.

Analysts said private equity investors would be attracted by the strongly cash generative nature of the business and the lack of debt on Warner Chilcott's balance sheet. Net debt at the end of June stood at just $15 million (€12.3 million).

The company reported operating profits of $187 million on turnover of $432 million in its 2003 financial year.

The price on offer represents a 23 per cent premium over last Friday's close, although it falls short of the high of 874p hit last March. Nonetheless, analysts believe it stands a good chance of success.

Davy analyst Mr Jack Gorman notes that it represents a 2005 enterprise value/EBITDA multiple of around nine times compared to a sector average of seven times.

A counterbid remains a possibility, although analysts noted the all-cash nature of the approach could prove hard to match.

They also point out that industry players such as Dutch firm Akzo Nobel, German group Schering and US firms such as Wyeth and Johnson & Johnson failed to show any interest in the company when takeover talks with Barr Laboratories floundered last July.

The company's largest shareholders include Dr King with a 7.7 per cent stake and Mr Elliott, who owns nearly 3 per cent.

Elan, which owned nearly a fifth of Warner Chilcott before its acquisition by Galen in 2000, retained a 3.8 per cent stake in the merged group. Standard Life is among the largest institutional investors, with a 4 per cent interest.

Group began as Galen

Warner Chilcott, formerly known as Galen, was founded in Portadown in 1968 by Dr Allen McClay, taking its name from a famous Roman physician.

Dr McClay had left Glaxo to start his own business marketing pharmaceutical products.

Alongside its pharmaceutical services business, which ranged from clinical trials testing to chemical synthesis, it also established a small pharmaceutical products business.

In 1997, Galen listed on the London and Irish stock exchanges. The deal that transformed the company followed three years later when it bought Warner Chilcott, a US rival 20 per cent owned by Elan and headed by Roger Boissoneault.

Following the acquisition, which gave Galen a listing on the Nasdaq, it transformed into a pure pharmaceutical products firm focused on women's healthcare and dermatology in the US market.

The metamorphosis culminated this year in the decision to abandon the Galen name in favour of the Warner Chilcott name, which it had continued to employ in the US.

Over the past four years, the company sold off its mostly British-based pharmaceuticals services business to Dr McClay.

But, in the past two years, the stock has been buffeted by a number of factors, including a scare about the safety of hormone replacement therapy, the threat of generic competition and the collapse last year of takeover talks with Barr Laboratories.

Recently, concerns about the performance of its anti-depressant, Sarafem, have weighed on the share price, providing the opportunity that has led to the latest takeover approach.