Monday 23 April 2018

Drugmaker Perrigo to buy Elan for $8.6bn

Kelly Martin, CEO of Elan
Kelly Martin, CEO of Elan
John Mulligan

John Mulligan

IRISH drug company Elan is to be bought for $8.6bn (€6.4bn) by US-based generic pharmaceutical group Perrigo.

Shares in Elan gained 8.8pc on the news.

The new combined group will be headquartered in Ireland.

The price Perrigo has agreed to pay – the equivalent of $16.50 per Elan share - represents a near 11pc premium to the closing price of Elan stock in New York last Friday.

Perrigo will pay $6.25 in cash and offer 0.07636 of its own shares for each Elan share. Perrigo shares were trading at $134.23 last week.

The deal – which has to be approved by shareholders - isn’t expected to close until the end of the year.

The sale brings to an end a months-long saga involving Elan, which had been the target of a hostile takeover bid by New York-based Royalty Pharma after the Irish firm sold its last remaining asset – a 50pc stake in multiple sclerosis drug Tysabri. Elan continues to receive substantial royalties from Tysabri sales.

Royalty had eventually offered to pay as much as $8bn for Elan, which included contingent payments based on future Tysabri milestones.

Elan put itself up for sale last month in a continuing effort to thwart a hostile bid. That move came just before Elan shareholders rejected proposals from the firm that included a plant to invest $1bn to buy a 20pc stake of royalties from drugs produced by Theravance.

Perrigo chairman and chief executive Joseph Papa this morning described the planned acquisition of Elan as “compelling” for the Irish company’s shareholders. Perrigo will also benefit from accumulated net losses of about $2bn on Elan’s books against which it will be able to significantly reduce or eliminate future tax liabilities on profits.

Mr Papa said Perrigo’s offer “fully takes into account the value of Elan’s assets”.

Elan had previously claimed that Royalty’s bid undervalued its assets.

Elan chairman Bob Ingram said that shareholders are being presented with an “excellent transaction” with the opportunity to “benefit from the potential upside value of the new company”.

Independent News Service

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