Pharmaceuticals company, Galen, has announced the sale of its development and manufacturing services business to a company controlled by the firm's founder and former chairman, Mr Allen McClay, for $34 million (€28 million).
The disposal had been expected as the group increasingly focuses on expanding into the US speciality pharmaceutical market.
Mr McClay has purchased other parts of Galen, with this transaction valuing his total acquisitions at $277 million.
Galen is selling the development and manufacturing services business for cash.
Mr McClay yesterday sold 4.3 million of his Galen shareholding to fund the transaction, raising about £30 million.
Following the sale, his shareholding was reduced from 6.3 per cent to 8.6 per cent.
Galen had reserved the right to participate in the share placing or to otherwise repurchase its shares if it considered this to be in the best interests of the company and its shareholders.
The business, known as Pharmaceutical Development and Manufacturing Services (PDMS), reported sales of $17.8 million in the current year and contributed about 4 per cent of Galen's total revenues.
As part of Mr McClay's group, the unit will continue to manufacture, supply and distribute a number of Galen's products for the UK and Irish market.
Analysts expect that Galen may yet sell other UK assets in the future.
Galen chief executive, Mr Roger Boissonneault, said this contract manufacturing business was no longer seen as a core activity.
"This transaction is in line with our strategy to focus the company on its fast-growing pharmaceutical products business," he said.
Galen said the disposal had been factored into its guidance to the market for 2004, which pointed to revenues of $500 million and earnings per share of between $1 and $1.10.
Some analysts have recuded their earnings per share estimates to between $0.95 and $0.99 when this transaction is included.
Galen shares closed 32 cents lower in Dublin at €10.55 yesterday, after the sale of Mr McClay's shares.
The company will initially use the proceeds of the transaction to pay down its debts.
Analysts received the news positively. Mr Peter Frawley, at Merrion, said it was a welcome development.
" From a strategic point of view the disposal is to be welcomed given that its further execution by the group on its strategy of becoming a US-focused women's healthcare company."
PDMS provides a broad range of specialist services for the pharmaceutical, healthcare and biotechnology industries, including drug product formulation, process development and inventory management and distribution.
