Elan Advances on Speculation Pfizer May Seek Purchase (Update1)
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By Jeff Kearns and Shannon Pettypiece
Jan. 8 (Bloomberg) -- Elan Corp. shares jumped as much as 20 percent in the U.S. and bullish options trading surged to 19 times the average on speculation that Pfizer Inc. may acquire the Irish drugmaker.
“The speculation is that Pfizer is possibly looking at acquiring Elan,” said Frederic Ruffy, the senior options strategist at WhatsTrading.com, a New York-based provider of options market analysis.
Elan American depositary receipts rose 67 cents, or 8.8 percent, to $8.26 at 2:01 p.m. in New York after earlier rising as much as 20 percent, the biggest intraday gain since August. The shares plunged 73 percent last year.
The Financial Times said Jan. 4 that Pfizer may “acquire a large rival drug company to improve its financial health,” citing an interview with Jeffrey Kindler, the New York-based drugmaker’s chief executive.
Pfizer spokesman Ray Kerins declined to comment on market rumor or speculation. Elan spokeswoman Mary Stutts said the company doesn’t comment on market speculation.
Investors have said Pfizer could build on its extension into biological medicines by buying Amgen, the world’s largest biotechnology company by sales, the report said.
Trading of options to buy Elan shares rose to 68,887, the most since August, with 3.4 calls traded for each put. Calls give the right to buy a security for a certain amount, the strike price, by a given date. Puts convey the right to sell.
The most-active options were January 2010 $10 calls, which lost 2.3 percent. They accounted for about a fifth of today’s options trading linked to the stock. The shares haven’t closed at more than that price for two months.
To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net; Shannon Pettypiece in New York at spettypiece@bloomberg.net
Last Updated: January 8, 2009 14:16 EST
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