Other companies such as Mylan International and Endo Health Solutions Inc, which took a preliminary look at Elan, are no longer involved in the process, they added.
All the people asked not to be named because the matter is not public. Allergan, Forest and Elan declined to comment. Endo and Mylan did not immediately respond to requests for comment.
In June, Elan, which has a market capitalization of $7 billion, rejected a hostile bid by US-based investment firm Royalty Pharma worth up to $8 billion. Instead, the company put itself up for sale.
Companies like Allergan and Forest are interested in Elan primarily for the tax savings that come from being domiciled in Ireland, where the corporate tax rate is 12.5 percent, the people familiar with the matter said.
Some Elan investors have speculated that any of the industry buyers could acquire Elan and sell a portion of the royalties on the drugmaker's multiple sclerosis drug Tysabri to Royalty Pharma, which is what the investment firm has wanted all along.
With such a deal, Royalty would get the Tysabri royalties, the industry buyer would get a lower corporate tax rate and Elan would get a better price for the company. It is unclear if any such discussions are under way, however.
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