Wednesday 23 October 2019

Elan in war of words over royalty stream from Tysabri

John Mulligan

John Mulligan

US FIRM Royalty Pharma has dismissed Elan's claims that its future royalty stream from multiple sclerosis drug Tysabri is worth up to $6.6bn (€5bn).

The war of words between the two companies is continuing as Royalty nears the endgame in relation to its hostile $6.4bn (€4.9bn) takeover attempt of the Irish company.

Royalty has valued the future Tysabri royalties at $4.6bn (€3.5bn).

At Elan's annual general meeting in Dublin yesterday, chief executive Kelly Martin said that "there's always a plan B and a C", in the event that the company's shareholders in effect reject management's new strategy as it seeks to reinvent itself following the recent sale of its 50pc stake in Tysabri for $3.25bn (€2.5bn). It will continue to receive royalties from the drug.

Elan will ask shareholders at an extraordinary general meeting next month to approve acquisitions, a share buyback and a disposal.

The meeting will determine whether the company shareholders believe management can deliver on its promise to deliver long-term value in the face of a $12.50 a share offer from Royalty. Elan has agreed to pay $1bn (€766m) to buy a 21pc stake in a royalty stream a firm called Theravance receives from GlaxoSmithKline (GSK).

Some analysts have questioned whether Elan has agreed to pay too much for the stake.

"We take nothing for granted," said Elan chairman Bob Ingram – a former senior GSK executive on whether he expects shareholders to approve the deals.

"There is always a plan B and a C," said Mr Martin. He said if shareholders have a different opinion about the strength of the Theravance deal, then that's "their call".

"I think what you will see is Elan immediately announce plan B because that's a strong signal from shareholders if they don't like one, two, three, four of the transactions," he said.

Royalty has claimed Elan is embarking on a "frenetic jumble of transactions" in an effort to thwart its bid – something Elan refutes, noting that it's been in discussions regarding its planned deals for months.

Royalty chief executive Pablo Legorreta said yesterday that he will have further comment on Elan's Tysabri valuation claims "in coming days".

Irish Independent

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