Galen says takeover talks break down

Negotiations have fallen down over the proposed purchase of Galen Holdings of Northern Ireland by a firm believed to be US generics specialist Barr Laboratories.

The UK firm had confirmed last week that talks with a potential buyer were ongoing, but today said that negotiations had broken down.

Galen has transformed itself in recent years from contract researcher and manufacturer to a full-fledged specialist in women's health products, and appears to have made itself a takeover target as a result. The company has just launched its Femring (oestradiol acetate) product for menopausal symptoms in the US, attracting the attention of other players in the sector.

Other companies tipped to have an interest in Galen's female health franchise include Johnson & Johnson, Solvay and Procter & Gamble.

News of the approach sparked a 30 per cent rise in Galen's shares to 740 pence at the end of last week, but a fallback to 708 pence occurred after analysts suggested that Barr could be the only company in the running, limiting the likely offer price. Today's news sent Galen's shares even lower, down almost 15 per cent to 603.5 pence in mid-morning trading.

In May, Galen reported record sales and profits growth in the second quarter to March. Operating profit before goodwill and intangibles was £34.8 million (€49m), up by nearly 50 per cent compared to a year earlier.