Allergan, Forest expected to bid for Elan this week

Allergan ($AGN) and Forest Laboratories ($FRX) are still in the hunt for Elan. The Irish drugmaker is looking for formal first-round bids this week, sources tell Reuters, after opening a formal sale process last month.

According to the news service, Mylan ($MYL) and Endo Health Solutions had both taken a look at an Elan ($ELN) bid, but they've dropped out. Allergan and Forest are among those still interested. One of the key attractions for U.S.-based pharma companies is Elan's Irish base, where corporate taxes amount to 12.5%.

The bidding process comes after Elan spurned bids from Royalty Pharma, which specializes in snapping up royalty streams from drugmakers that have licensed out or otherwise sold off the rights to their products. Elan sold its share in the blockbuster multiple sclerosis treatment Tysabri to partner Biogen Idec ($BIIB) earlier this year for $3.25 billion plus royalties.

Drugmakers eyeing Elan may have a two-stage deal in mind, Reuters says. A buyer could take over Elan, getting access to the company's cash store and low tax rate, and then sell a portion of its Tysabri royalties on to Royalty Pharma.

Meanwhile, Allergan is speculated to be a takeover target itself, with worries about generic competition taking a toll on its stock. Forest, meanwhile, is suffering from the loss of patent protection on its No. 1 product, Lexapro, and aiming to grow its way out of that hole.

- read the Reuters news

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