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Elan drags ISEQ in to negative territory

Wednesday, February 06 17:39:17

A busy day for corporate news stories and interim statements sent the ISEQ sharply higher this morning with DCC, Smurfit Kappa and Aer Lingus making the heading but a major sell on Elan dragged the index down in afternoon trading.

The index fell 13.28 points to 3,516.72.

Shares in Elan plunged 6.3pc or 49c to E7.23. Elan is raising more than $3.25 billion by selling its interests in its main drug and will splash out most of the proceeds on acquisitions, effectively reinventing itself as a company. Under a deal announced today, Elan's partner Biogen Idec will take full ownership of blockbuster multiple sclerosis (MS) treatment Tysabri and will make an upfront payment to the Irish group plus royalties on future sales. While the deal gives Elan scope to return some cash to shareholders as well as strategic flexibility to buy new assets, it leaves its future shape unclear since Tysabri was by far its most important product, responsible for almost all its revenue. Elan has already spoken to several companies about potential deals and can move quickly once the sale its completed, Chief Executive Kelly Martin said. "You can do a lot of things with $3 billion, you can buy companies, molecules, you can partner, you can share risk. The world is our oyster," Martin said in a telephone interview. "We are not necessarily restricting ourselves to one therapeutic area or one type of clinical asset. We will not be restricted to our past, which was by and large neurological." Martin said there were hundreds of small- to medium-sized drug companies with capital or capability needs, meaning there was an "enormous amount of transactions" Elan could do.

Irish packaging group Smurfit Kappa posted an 11pc rise in full-year pretax profit, buoyed by strong demand and increased exposure to high-growth markets such as Mexico. Shares in the group, which designs and manufactures paper-based packaging for the likes of Unilever and Procter and Gamble, were up 2.5pc at E10.32, not far short of a five-year high of E10.64 set last week. Strong demand and a stable outlook also promoted Europe's leading containerboard and corrugated packaging producer to increase its final dividend 37 percent to 20.5 cents per share. Dublin-based Smurfit, formed through the 2005 merger of Jefferson Smurfit and Kappa Packaging, has for the last four years focused on paying down debt which stood at 2.79 billion euros at the end of 2012. The company, which last month successfully refinanced some of its debts with a 400 million euros note offering, said yearly pretax profit rose to 331 million euros ($448 million), boosted by cost controls, on revenue which was flat at 7.34 billion. "This is our second largest result since 2007 and this performance reflects the benefit of our continuing focus on operating efficiency," Chief Financial Officer Ian Curley told reporters.

Shares in DCC jumped 94c each to E25.69. DCC may join a long list of top Irish corporates to abandon its listing on the Irish Stock Exchange for London, its interim management statement said this morning. It said that it is considering whether to seek a listing on the FTSE UK Index series, which would result in the cancellation of its listing in Dublin as its business increasingly shifts towards the UK. "Since its original stock exchange listing in Dublin and London in 1994, DCC has achieved significant growth in scale and in geographic footprint. For some time, the majority of the Group's revenue and operating profit has been generated in the UK with most of the Group's development activity and expenditure since 1994 taking place outside Ireland. In addition, the profile of DCC's shareholder base has also changed significantly, with approximately 77pc of DCC's shares now held by institutional investors outside Ireland," the statement said.

Aer Lingus shares rose to E1,30 after a strong set of full year results, reaching Ryanair's bid price after Ryanair sought to do a deal with two UK rivals to strengthen its chances of winning EU approval for a takeover.

Ryanair is seeking binding commitments from two rivals to compete with it as part of a last-ditch attempt to secure anti-monopoly approval for a takeover of Aer Lingus, a source close to the deal said. British Airways and Flybe have agreed in principle to increase their presence on the Irish market to allay concerns of the European Commission, Europe's anti-monopoly watchdog, but Ryanair is seeking a binding commitment approved by their respective boards, the source said. Ryanair stocks gained 5c to E5.60.