Elan moves closer to sale block; second bid for Genentech expected; Puget trades at discount to deal

By Cristal Cody

New York, Jan. 13 - Elan Corp., plc said it's not talking to Pfizer Inc. about a sale, but the company hired Citigroup Global Markets on Tuesday to explore strategies, which include a sale or merger.

In other deals, market watchers believe Roche will come back with a second bid of about $95.00 for Genentech Inc.

Moving to other activity, investors are trading Puget Energy Inc.'s stock at a $2.00 discount to the $30.00-a-share offer for the company, but the deal should close soon, one analyst told Prospect News.

Meanwhile, the markets were mixed Tuesday and the big news came after the bell rang. Citigroup Inc. and Morgan Stanley confirmed a deal to combine their brokerage operations for $2.7 billion. Morgan Stanley gets a 51% stake in the joint venture.

The Dow Jones Industrial Average fell 25.41, or 0.30%, to 8,448.56.

The S&P 500 index rose 1.53, or 0.18%, to 871.79, while the Nasdaq Composite index rose 7.67, or 0.50%, to 1,546.46.

Elan considers change

Elan said its goal is to secure access to financial resources and commercial infrastructure for its pipeline and product portfolio.

The range of alternatives that will be assessed by Citigroup could include a minority investment or strategic alliance, a merger or a sale of the company.

Shareholders of the Dublin-based company have criticized Elan chief executive officer Kelly Martin over management decisions and weak sales.

Elan's American Depositary Receipts fell 17 cents, or 2.12%, to close at $7.86 Tuesday. The ADRs have traded from $4.99 to $37.45 over the past year.

The ADRs rose last week on deal rumors, but Martin has said the company is not in sale talks with Pfizer.

Shares of Pfizer rose 23 cents, or 1.32%, to $17.59 Tuesday.

Ball in Roche's court

Genentech's board already has rejected Roche's offer of $89.00 a share as too low, but the company might accept a slightly higher offer.

"Most of us believe in order to get this deal, they will have to go modestly higher than $89.00," said Eric Schmidt, a biotechnology analyst for Cowen and Co.

Genentech shares fell 73 cents, or 0.83%, to $86.74 in trading Tuesday.

"The ball is back in Roche's court to come back with a higher offer," Schmidt said. "I'm not sure that Genentech's board wouldn't accept an offer that's modestly higher than $89.00, but they're clearly looking for something at least in the nine-handle."

Puget stock off

The Washington Utilities and Transportation Commission approved the acquisition of Puget Energy and subsidiary Puget Sound Energy Inc. in December, but investors must wait out an appeals process to the decision through January.

The comment period expired on Friday, although another 30 days remains to appeal to a Washington court, said James Bellessa, an analyst with D.A. Davidson & Co.

"The overall market is not putting up a great chance of closure, but it is giving it a higher chance than a few weeks ago," he said.

Puget Energy shares fell 53 cents, or 1.86%, Tuesday to close at $28.00.

Bellevue, Wash.-based Puget Energy will be taken private in a $7.4 billion deal from buyout group Macquarie Infrastructure Partners, the Canada Pension Plan Investment Board and British Columbia Investment Management Corp.

"The banks indicated in December that they're still willing to do the funding," Bellessa said.

The proposed sale has received approval from federal regulators and shareholders and has been in the works since October 2007.

Mentioned in this article:

Citigroup Inc. NYSE: C

Elan Corp., plc NYSE: ELN

Genentech Inc. NYSE: DNA

Morgan Stanley NYSE: MS

Pfizer Inc. NYSE: PFE

Puget Energy Inc. NYSE: PSD

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.