Change of plans at Elan (NYSE: ELN). The company had been mulling a spin-off of its drug-delivery division, but plans are now on hold because Elan thinks market conditions aren't favorable. This is the second time Elan has postponed selling Elan Drug Technologies--it tried to unload the business in 2008, but failed because of the credit crisis.
Elan also has confirmed its financial guidance for 2010, adding that it anticipates being cash-flow positive in 2011, the company says in a statement. In addition, Elan announced that it is restructuring its debt; in an effort to cut gross debt by 20 percent to $1.24 billion, Elan plans to retire up to $500 million that's due to mature over the next three years.
"The market should see the balance-sheet reduction as a positive," New Street Research analyst Crawford Currie said, as quoted by the Wall Street Journal. Shares closed in New York up 3.4 percent at $5.43.
"We continue to carefully manage both our balance sheet and cost structure to ensure that we remain financially strong," CEO Kelly Martin (photo) says in a statement. One wonders whether these steps are in response to a new campaign by activist shareholder Ib Sonderby, who's calling for a shakeup of the company's board and management. Sonderby last month shot off a letter, accusing Elan of failing to "monitor" Martin, who he claims has "publicly misled investors, destroyed collaborations with Elan's corporate partners" and "extracted millions of dollars in compensation," the WSJ reports.