Elan has launched an aggressive defence against a takeover offer for the company by making its own $1bn (€750m) acquisition of rights to drug royalties.
The move comes as Irish pharmaceuticals giant Elan is fighting off a $6.6bn takeover attempt from US drug-maker Royalty Pharma.
Elan is in play after selling its 50pc stake in its main product, multiple sclerosis treatment Tysabri, to Biogen in February.
Under that deal, Elan retained rights to the drug as well as being paid $3.25bn.
It left Elan with no commercial drug operations but $2bn in the bank and drug royalties, even after returning $1bn to shareholders through a share buyback.
That made the company an attractive takeover target for Royalty Pharma, but the cash pile gave management the capacity to seek their own deals.
Yesterday, Elan announced that it has agreed to buy the rights to a 21pc share of the royalties that US-based Theravance receives from manufacturer GlaxoSmithKline, which produces Theravance's respiratory drugs.
Elan's chief executive Kelly Martin said the deal is not designed to block the Royalty offer.
However, Royalty is understood to be considering cutting its offer for Elan following the announcement.
Rating agency Moodys said it has placed Elan's rating on review for a possible downgrade after the latest deal was announced.
Shares in Elan dropped slightly to $11.47 each in New York yesterday, but remain well above the level of Royalty Pharma's $11.25 per share offer.
Elan is looking at financing the acquisition by issuing a new bond debt.
Ironically, the acquisition of rights to share Theravance's royalties follows the strategy set by Royalty Pharma of investing in the residual rights to drugs that are in production, rather then in new treatments.
Elan signed its Theravance deal days after US authorities granted approval for its new drug Breo, the first of four drugs being developed with Glaxo.
Analysts think the treatment for airflow obstruction could generate as much as $4bn in sales. Breo alone will make the Elan deal earnings positive from next year, Elan said.
Berenberg Bank said the acquisition will put Elan on a more solid financial footing.
Jefferies, meanwhile, said the stake in long-duration drug assets made it an impressive deal.
However, UBS said the price being paid to share Theravance's royalties is high and Deutsche Bank said it was difficult to see significant shareholder value being generated. (Additional reporting Reuters and Bloomberg)