A deal that just a couple of days ago was thought to have at least a 50-50 chance of being pulled off between Irish drugmaker Elan and Bristol-Myers Squibb turned out to be dead on the table after our drugs reporter Rans Pierson reported that talks between the two last month never got as far as price.

Elan markets multiple sclerosis drug Tysabri with Biogen Idec, which is holding a shareholder meeting today. While the soured prospects for that deal may be on investors’ minds, the issue will only come up briefly if at all, as the company has a much bigger ownership issue to deal with in the form of activist investor of Carl Icahn.

In his second proxy fight for board representation at Biogen, Icahn wants Biogen’s board to consider splitting the biotechnology company into one firm focused on neurology and another focused on cancer. Icahn also wants Biogen to examine its cost structure and improve its relationships with its partners.

Last year, Icahn lost a proxy fight against Biogen. He had accused the Cambridge, Massachusetts-based biotech of sabotaging its own announced attempt to find a buyer.

The best seat in the house for a healthcare dealmaker has to be across the table from Elan CEO Kelly Martin. With his stock price in a coma and his two most promising drugs locked up in joint ventures, it’s hard to see what kind of bargaining power the long-time Wall Street veteran can muster to sell the Irish drug maker at a price shareholders will be happy with. Investors seem to think a deal is possible, or at least that the prospect for a deal is better than the company turning the corner on its own. They bid up the stock 16 percent on news that Elan had hired Citigroup to strategically review the company. The stock has lost nearly 70 percent since mid-July. Though the company says a sale is not its preferred strategy, this is what M&A folk tend to mean when they say strategic review.

Generally, investors have had little reason to feel confident about Elan. It is not currently making any money, a common condition for biotechs, and has $1.7 billion in debt coming due within the next five years. Though there is M&A activity in the sector, Elan is looking particularly anemic. Last month, it said it would cut 114 jobs and close its Tokyo and New York offices. With a market cap around 3.2 billion euros ($4.3 billion) it’s hardly too big for a Pfizer, Merck or Wyeth to swallow. There were rumors that Pfizer was sniffing around last week, but Elan has distanced itself from the talk.

Big pharma’s strategy of using marketing joint ventures to allow them to win big returns on successful drugs without taking on the bigger risks associated with Biotech failures has proven to be more valuable than buying biotechs outright. And many of the biotech sector’s big prospects are spoken for by way of joint venture. With the economic crisis having forced private equity to the sidelines, M&A is now a strategic buyers’ market. Elan is probably counting on a current flash of merger activity to cloud any negatives for potential buyers.

Elan’s existing big drug partners - Wyeth and Biogen - might seem like the best fits, or at least the least messy. They both have agreements allowing them to buy the drugs they co-market. But Biogen has been under pressure from none other than Carl Icahn to sell itself, so a big acquisition looks challenging. That leaves Wyeth, which said recently just last week its strong cash position could enable it to make new biotech acquisitions. If Wyeth makes a move, it should expect to get excellent terms.

Others Deals News:

* Deutsche Bank is in talks with Deutsche Post about the timing of its planned takeover of retail lender Postbank, sources with direct knowledge of the matter told Reuters.

* Royal Bank of Scotland is expected to sell up to $2.6 billion worth of shares in Beijing-controlled Bank of China as early as Tuesday, market sources said.

* BNP Paribas announced a formation of a T$2 billion ($60 million) insurance tie-up with Taiwan Cooperative Bank, aiming to tap one of Asia’s top insurance markets.

* USJ Co, which operates a Universal Studios theme park in Japan, may go private in a buyout led by Goldman Sachs, five people familiar with the matter said.

* British-based newspaper publisher Mecom is selling its German operations to Germany’s M. DuMont Schauberg for 152 million euros ($204 million) in cash, to reduce debt which has hammered the company’s stock.

* China Eastern Airlines, the weakest of the country’s three biggest airlines, wants to sell a roughly 30 percent stake in regional carrier Happy Airlines to alleviate its strapped finances, company sources said.

* Emirates Telecommunications Corp said a consortium it is part of would pay 300 million euros ($402.1 million) to acquire a mobile phone licence in Iran and was in talks to buy an operator in Iraq.

* Malaysia’s Top Glove Corp, the world’s largest producer of rubber gloves, said it is in talks with several companies for potential acquisition, but did not name any.

* Flag carrier Air China said that its parent group was starting preliminary talks on the possible acquisition of East Star Airlines, a small private carrier based in the central city of Wuhan.

* Lead managers for a deal to sell 36 percent in Hynix Semiconductor have agreed to sell the stake by a tentative deadline of September, a leading Hynix shareholder said.

* Australia and New Zealand Banking Group has lifted its stake in Indonesia’s PT Panin Bank, paying $114 million for an extra 8.4 percent, as part of its Asian growth strategy, the bank said.

(Photo: Kelly Martin, President and CEO of Elan, speaks at the Reuters Health Summit in New York November 17, 2008. REUTERS/Brendan McDermid)

August is traditionally a quiet month for M&A, as bankers head out to the Hamptons or further afield. This year could prove especially quiet as people make the most of the slow dealflow — particularly on the private equity side — to take longer than usual breaks.

But even as Wall Street slows down for the summer, a few auctions are showing signs of life. The effort to sell Irish drugmaker Elan’s drug delivery unit is one sale that is hotter than most, according to bankers. First round bids went in last week and a number of U.S. private equity names are said to be keen on the asset, which could fetch $1.3 billion to $1.4 billion.

Also still in play through the dog days of summer are Reed Elsevier’s Reed Business Information unit, with first round bids due this week expected to range from $2 billion to $2.5 billion, and Rio Tinto’s U.S. coal assets.

With the prospect of sharply decreased bonuses, summer trips may be a little less posh this year. Have you downgraded from the Hamptons or made other cost-cutting vacation plans? Tell us in comments.