Sunday 25 February 2018

Elan aims to fight takeover with dividend sweetener for shareholders

John Mulligan

John Mulligan

Irish drug company Elan is trying to bolster its defences against a possible €5bn ($6.5bn) bid by sweetening shareholders with the promise of a regular dividend.

Elan is being circled by US-based Royalty Pharma, which has pitched a possible $6.5bn bid for the company to shareholders. But Elan is resisting the overture.

Elan chief executive Kelly Martin insisted yesterday that the potential bid wasn't credible. "The vast majority of our investor base simply don't view Royalty's indication as worthy of any discussion," he said.

"I wish Royalty well, they can do what they need to do but we're not in any discussions with them at all on any topic and we don't see any need to have those discussions."

But in an effort to get its own shareholders onside in the event Royalty launches a formal bid, Elan will now give them a share in proceeds from royalties the company will get in perpetuity after it completes the $3.25bn sale of its 50pc stake in multiple sclerosis drug Tysabri. It is selling it to US firm Biogen Idec, which already owns the other 50pc holding.

Elan said it would pay an initial dividend to shareholders at the end of this year and then pay a dividend twice a year.

Just over a week ago, Elan said that it would spend as much as $1bn as part of a share buyback so investors can directly benefit from the Tysabri sale. But that announcement prompted Royalty Pharma to reveal it had approached Elan chairman Bob Ingram just days earlier with an indicative offer to buy Elan for $6.5bn.

The chief executive of Royalty Pharma, Pablo Legorreta, said yesterday: "I'm . . . struggling to understand why this offer is, in the words of Kelly Martin, 'not credible'. We look forward to meeting a number of Elan's large shareholders who have agreed to meet with us later this week."

Irish Independent

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