Rumor Du Jour: Wyeth Looking at Acquiring Elan (WYE, ELN)

Only one word comes to mind to describe this rumor: Absurd. I cannot see why any company would acquire Elan (ticker: ELN) at its current stock price. As of today's close, Elan had a $4.4 billion market capitalization, which represents a $5.2 billion enterprise value. Based on its reported third quarter revenue, Elan is trading at 10x annualized revenue. Moreover, the valuation implies a significant contribution from Tysabri in the future, a level which I believe is irrational.

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