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Elan purchases Liposome
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March 6, 2000: 3:47 p.m. ET
Irish pharmaceutical maker buying cancer drug specialist for $575M
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NEW YORK (CNNfn) - Irish pharmaceutical maker Elan Corp. PLC agreed Monday to buy U.S.-based Liposome Co. Inc., a specialist in cancer drugs, in a $575 million deal.
The acquisition gives Dublin, Ireland-based Elan (ELN: Research, Estimates), which has focused on treatments for neurological diseases such as Alzheimer's, greater access to the oncology market. Liposome (LIPO: Research, Estimates), of Princeton, N.J., is developing Evacet, a drug to fight breast cancer tumors. However, the proposed treatment has run into trouble in obtaining regulatory approval in the United States.
Under the deal, Liposome shareholders will receive 0.3850 of an Elan American depositary receipt (ADR) for each Liposome share they own. The acquisition values Liposome shares at $15.28 apiece based on Friday's closing stock prices - a premium of 6 percent - before a potential cash payment to Liposome shareholders of up to $98 million. That payment will hinge in part on the approval of Evacet in the European Union.
In midday trading in New York, Liposome shares rose 3/8 to 14-3/4, while Elan ADRs gained 1/4 to 39-15/16.
Liposome will operate as a separate business unit within Elan.
Liposome has been struggling to get approval for Evacet, after a U.S. regulatory panel last September rejected the drug, saying there is insufficient evidence to prove its effectiveness. A decision by European regulators is expected later this year.
Liposome also makes the antifungal drug Abelcet, which posted sales of $86.2 million last year.
The deal is expected to close by the middle of the year. 
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Elan Corp.
Liposome
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