Galen will triple its size with takeover of Ferring

NORTHERN IRELAND-based pharmaceutical group Galen Holdings yesterday unveiled plans to triple its size through a reverse takeover of Ferring Pharmaceuticals.

The move underlines the growing ambitions of Galen's founder, Dr Allen McClay, a former Glaxo salesman who established the Craigavon company in 1968 and still owns a 30 per cent stake.

It also reflects pressures inside the pharmaceutical sector, which has been alive with merger and acquisition activity topped by the recent failed Glaxo Wellcome/SmithKline Beecham tie-up.

Galen management said the Ferring merger would bring considerable synergies but stressed it was driven by prospects for growth, not cost-cutting.

John King, chief executive of Galen, said: "This will bring Galen a strong marketing network in Europe. But there will be equal opportunities in reverse for Ferring."

Galen shares were suspended at 437.5p yesterday, up from last year's flotation price of 150p.

The two companies said they hoped to conclude the merger arrangements by the end of the year. Some shares in the proposed new venture will inevitably find themselves coming on to the market to ensure that 25 per cent of the combined ownership is in public hands.

Ferring, Paris-based but privately-owned by the Poulsen family in Holland, is by far the larger of the two companies, with manufacturing plants in Scandinavia and Germany. It has 1,700 employees and an estimated capitalisation of around pounds 1bn.

Galen employs barely 700 staff but has shown prodigious growth since it was established in 1968. The company is poised to unveil interim profits of around pounds 7.3m tomorrow.

Last year Galen produced year-end profits of pounds 11.4m and analysts have pencilled in a 1998 figure of pounds 15m. Galen's best-selling product is the painkilling analgesic Kapake, but it has a range of treatments for gastro- intestinal and other ailments. It provides clinical trials for larger drugs companies.

Ferring is strong on urological and female health products, and also has a significant research and development operation.