Behrman acquires unit from Elan

US private equity house Behrman Capital has paid $122m for the lab testing services division of Irish pharmaceutical business Elan Corp.

Irish drug discovery business Elan Corporation has agreed to sell its US lab testing services division to US private equity firm Behrman Capital in a deal which values the business at $122m.


Athena Diagnostics, acquired by Elan in 1996 as part of its acquisition of Athena Neurosciences, is the latest in a series of disposals by Elan aimed at reducing company debt by $1.5bn in 2003. Elan, which currently has debt in excess of $3bn, will realise $82m on the sale.


US-based Behrman Capital says that it specialises in buyouts, leveraged build-ups and recapitalizations in information technology, outsourcing, business services and contract manufacturing industries. Investors in the firm include the California Public Employees’ Retirement System (CalPERS), New York State Common Retirement Fund, Chase Manhattan Bank and UBS Warburg.


In 2001, Elan recorded net revenue and operating profit for Athena Diagnostics of $36.3m and $11.6m respectively. For the first nine months of 2002, these figures were $31.2m and $9.7m. This transaction is toward the lower end of the deal range for Behrman, which looks to invest in companies with revenue ranging from $20m to $500m.


The sale follows a number of recent cash generating deals completed by Elan, including the sale of the North American and Japanese rights to its drug Abelcet to Enzon for $360m. Elan also recently sold Actiq, its cancer pain treatment, for $50m to Cephalon Inc. The sale of Athena Diagnostics is expected to close in early 2003.


Elan last week had its credit rating slashed three points by rating agency Moody's on concerns it will to be unable to pay off its debts. Moody's questioned Elan's heavy dependence on asset sales to meet upcoming debt payments. The company is struggling to meet a E1bn bond repayment by December 2003. Elan chairman Garo Armen said the company was ahead of its target of raising $1.5bn from asset sales.