Three directors of Northern Ireland pharmaceuticals group Galen are to sell some £100 million sterling (#167 million) worth of shares. The company is also selling another £200 million sterling worth of shares to existing and new institutional investors.

The sale by Galen founder Dr Allan McClay, chairman Mr John King and finance director Mr Geoffrey Elliott will substantially increase liquidity in Galen shares which are currently traded on the London, Dublin and Nasdaq markets. The three directors' almost 45 per cent will fall to around 30 per cent of the enlarged share Galen share capital.

Galen chairman Mr John King said that he and Dr McClay will each be selling five million shares, worth more than £37 million sterling at current market levels. Mr Elliott and the McClay Trust - a charitable trust - are selling one million shares each and will realise more than £7 million sterling.

Galen chief executive Mr Roger Boissenault said that the share issue "will facilitate the expansion of our portfolio of branded pharmaceutical products and enable us to pursue other selected product acquisitions and strategic opportunities".

The sale of £200 million sterling of new shares will transform Galen's balance sheet even after it pays £67 million sterling to Bristol Myers Squibb for Estracea tablets, which is the second biggest HRT treatment in the US.

Mr Boissenault said Estracea represented a significant addition to the company's portfolio. Galen is forecast to have net debt of about £100 million sterling at September 2001. No price has been set for the share issue and this will only be determined after a bookbuilding exercise over the coming weeks. It will, however, be not less than 90 per cent of the Galen share price the day before the price is announced.

Existing shareholders may buy more shares under the open offer, and any shares not taken up under the open offer will be sold to institutional investors in the US and Europe. The full £100 million worth of shares being disposed of by the directors is earmarked for sale to American investors. In addition, Merrill Lynch has a "greenshoe" option over £60 million worth of Galen shares if the institutional offer is oversubscribed.

Mr King said that the lack of liquidity in Galen shares has always been a problem. "We have not been able to build our shareholder base as we would have liked and this offer will address that difficulty," he said.

Not surprisingly, given the size of the share issue, Galen shares fell back on the London market where they closed down 42-1/2p on 782-1/2p sterling.