If you've been following Elan Corp. (NYSE: ELN) lately, you've probably come to take any story of a deal, takeover, sale with a grain of salt.This morning, Elan shares soared over 16% after stories on Reuters and the Wall Street Journal over the weekend said it is in advanced talks to sell a minority stake to Bristol-Myers Squibb (NYSE: BMY). Moreover, Elan was said to be in talks with a second suitor, but the status of those discussions was unclear. This, Reuters reported, could be the first move in a multi-step transaction to sell Elan outright.
While the shares are still up a healthy 12% by midday, now Bloomberg reports that according to UBS analysts, Bristol isn't in talks to buy a stake in Elan.
Elan is best known for its multiple sclerosis drug Tysabri, which it jointly markets with biotechnology company Biogen Idec Inc. (NASDAQ: BIIB), but Tysabri was linked to cases of a deadly brain infection. Elan is also developing an Alzheimer drug with Wyeth (NYSE: WYE). While the drug, bapineuzumab, held high promises, it too had some problems recently as questions regarding its efficacy were raised.
While industry analysts said a tie-up between the two companies would make strategic sense since Elan's focus matches Bristol-Myers's interest, Bristol may find it difficult to make a full acquisition of the Irish biotech company because of its drug partnership agreements. The agreements apparently allow BIogen and Wyeth to buy out the two drugs in case of ownership changes. And that would leave Elan without much else to offer.
We'll have to wait and see if this rumor proves true.
Entrepreneur's Journal: Putting together a solid sales contract
The week in preview: Earnings from Walmart, Macy's, and other retailers
Six top trades for the rest of 2009
