Business Irish

Sunday 22 October 2017

Elan's $1bn Dutch auction on share repurchase kicks off

John Mulligan

John Mulligan

A Dutch auction for Elan's $1bn (€750m) share repurchase scheme began yesterday, with shareholders set to vote on the programme next month.

The buyback comes as Royalty Pharma continues to stalk the Irish drug company with a $6.6bn takeover plan.

Elan said that it was offering to pay its own shareholders between $11.25 and $13 per share under the $1bn buyback scheme.

Under a Dutch auction, shareholders have to tender their shares and tell the company what the lowest price is that they will accept within the range set by the group.

The company will assess the offers it receives from shareholders and then buy the stock back at the lowest possible price that will enable it to purchase up to the total $1bn repurchase amount set aside for the buyback.

Proceeds

Elan will use the proceeds from its $3.25bn sale of its 50pc stake in MS drug Tysabri to fund the share repurchase. That sale to Biogen Idec is expected to close in coming weeks.

US-based Royalty Pharma has tabled an indicative offer of $11 per Elan share. It claims that shareholders would be better off accepting such a deal, if it's formally offered, rather than relying on Elan to successfully invest the remaining proceeds from the Tysabri sale.

It has been meeting Elan investors in an effort to persuade them to back a planned deal.

Elan, under chief executive Kelly Martin, has also pledged to pay its shareholders a twice-yearly dividend in an effort to thwart the Royalty Pharma takeover plan.

Royalty Pharma chief executive Pablo Legorreta told the Irish Independent last week that he believed Elan could face difficulties in making substantial acquisitions without shareholder approval due to the indicative offer that has been made.

Irish Independent

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