Morning business news - May 13Monday 13 May 2013 10.36
ELAN AGREES NEW ROYALTY DEAL WITH THERAVANCE - Pharmaceutical company Elan has announced a new royalty participation agreement with Nasdaq listed Theravance. Elan will make a one off payment of $1 billion to the company in exchange for a 21% stake in future royalty payments from four respiratory programmes which Theravance has developed with Glaxo Group.
Elan's chief executive Kelly Martin said the programmes are all at an advanced stage. "One was approved by the US Food and Drug Administration on Friday. Two others have been filed and the last is in phase 2 on the way into phase 3,'' he said.
Elan expects that the new venture will generate income from next year and it says it will pay a dividend to shareholders in twice yearly instalments amounting to 20% of Elan's gains. The company will convene an extraordinary general meeting within the next month or so to consider the matter. Kelly Martin said the transaction immediately diversifies Elan's business. "The company is interested in building as much value as possible. It's just one of multiple transactions that we'll do in the very near future. It's the first piece in the puzzle of rebuilding different aspects of the company, all to the benefit of shareholders," Mr Martin said.
The Elan CEO would not be drawn on whether Elan would accept an improved takeover bid from Royalty Pharma. The board of Elan recently rejected an offer from Royalty of around $11 per share for the company.
ANOTHER SLOWDOWN IN CONSTRUCTION ACTIVITY LAST MONTH - Activity in the construction sector contracted at its sharpest pace in seven months in April, according to the Ulster Bank Construction Purchasing Managers Index. New orders and purchasing activity were down - as was employment in the sector, as jobs continue to flow out. The contraction was across all areas - housing, commercial and civil engineering.
Ulster Bank chief economist Simon Barry said the sector was not far away from six full years of contraction. "It remains the case that conditions are very tough,'' he stated. New business decreased for the sixteenth successive month. "New incoming business levels are very low and continue to fall," according to Simon Barry. "That suggests that the near term prospects are not encouraging. There are many headwinds that the sector faces in the short term."
However, Simon Barry pointed to some signs of optimism over the longer term. "There are tentative signs of a bottoming out. New housing activity indicators are showing a pickup so perhaps over the course of the year we might see some improvement, albeit from very depressed levels following what's been an enormous correction by any standards,'' he said.
MORNING BRIEFS - Oil and gas exploration group Circle Oil has announced higher revenue and operating profit for 2012. In its preliminary results, revenue came in at just over $73m - a 26% increase on 2011. Operating profit of just over $28m was 41% up on the previous year. That was largely accounted for by enhanced oil production at its Egyptian operations and better gas output in Morocco.
*** The Irish League of Credit Unions voted over the weekend to reject the new Central Bank scheme for dealing with heavily indebted households, media reports suggest. Last week the Central Bank announced a pilot scheme of debt relief to 750 troubled borrowers but the credit unions feel that they will be the big losers in any such schemes because priority was being given to repaying mortgages.
*** US retail sales figures are due out today and they are expected to show a contraction in spending in the world's biggest economy. US industrial production data is also expected to show a contraction, leading many to conclude that the economic comeback may be cooling off somewhat. Car sales are levelling off as new taxes kick in and US consumers are putting more money away in savings than they were previously.