Medeva revealed on 8 September that it was in talks with an unnamed bidder and has since refrained from naming the company in question. Dr Bill Bogie, chief executive, said the board had had no hesitation in rejecting the subsequent cash offer. He declined to indicate the value of the bid.
However, sources confirmed the bid was 158p per share and that it came from Elan. They added that the Dublin company might take the bid hostile. Elan declined to comment.
"I'm sure we could have negotiated a few pennies here and there, but the offer was so far below the valuations put on the company by our advisers there was no point," Dr Bogie said.
Dr Bogie said Shire Pharmaceuticals had approached the group in July in what was nothing more than a "dalliance", which had not resulted in formal talks. Previously, the group had declined to comment on rumours that talks between the two had collapsed. Dr Bogie said that talks with Shire remained a possibility.
He rejected suggestions that Medeva directors, now perceived as failing to pull off deals with two companies, were facing mounting shareholder criticism. "We've had unanimous support from all our major shareholders. They've been there a long time - they may be long-suffering - and we have had good feedback from them."
The shares fell 36.5p, or 22 per cent, to 132p, valuing the company at pounds 451m. The shares were at 122p on the day before talks were announced. Dr Bogie dismissed suggestions of a management buyout. "It's not something on my agenda."
Medeva's share-price decline, from a high of 330p in 1997, follows the emergence of competition to its main product, methylphenidate, a treatment for hyperactivity. The company is pinning its hopes on Hepagene, a treatment for hepatitis B, which so far has not lived up to expectations in trials, analysts say.