Sunday 21 January 2018

Elan puts itself up for sale in bid to fend off hostile takeover

Royalty Pharma's current offer is worth $8bn

Shareholders to vote on Elan chief Kelly Martin’s proposals
Shareholders to vote on Elan chief Kelly Martin’s proposals

Thomas Molloy Deputy Business Editor

THE strange battle over Elan took another curious twist yesterday when the Dublin-based drug company put itself up for sale in a last-ditch attempt to fend off a hostile bid by Royalty Pharma that shareholders will consider next week.

Elan urged its shareholders not to tender into Royalty's current offer, worth a potential $8bn (€6bn), but said the US company would be able to participate in the formal sale process if it so wishes.

The sale of Elan to a company other than Royalty Pharma would end the biggest hostile takeover bid in the world and probably remove one of the biggest companies from the Dublin stock exchange.

"Elan Corporation... today announced that it is proceeding with a formal sale process in light of the expressions of interest received to date," the company said.

CASH

Reuters reported earlier this week that Elan had attracted the interest of a number of mid-sized drug companies and a cash offer of $15.50 per share could be enough to secure its support for a bid.

Royalty's current bid offers $13 in cash per share and added a clause known as a contingent value right that could add a further $2.50 per share if blockbuster drug Tysabri hits certain sales milestones.

Seeking to stop Elan pushing through two sets of defensive acquisitions at a meeting of shareholders due to be held on Monday, Royalty Pharma, last month, made its bid subject to it rejecting all resolutions presented at the meeting.

Elan's shares shot up as much as 11pc, the biggest gain in four months.

Elan will reveal voting results on four transactions proposed by chief executive Kelly Martin when shareholders meet on Monday.

Royalty's takeover offer is contingent on shareholders rejecting all four proposals.

"Elan's move is a reaction to its shareholders not supporting management's measures that would have fended off Royalty's bid," said Erik Gordon, a business and law professor at the University of Michigan in Ann Arbor.

"It's a last-ditch effort, and it may work if shareholders believe that an auction will bring in better offers that haven't, so far, been put forth."

Royalty Pharma said earlier yesterday that a majority of investors voted against three of the proposals.

Shareholders appeared to favour a stock buyback plan, Royalty Pharma said after reviewing the votes so far.

APPROVED

Royalty Pharma is seeking to overturn a ruling by the Irish Takeover Panel so that it can proceed with the offer even if one of the transactions is approved.

"The Elan board and management are aligned in maximising the full value potential of the business on behalf of its shareholders," Elan said.

Elan's financial advisers are Citigroup, Davy Corporate Finance, Morgan Stanley and Ondra Partners.

JPMorgan Chase, Bank of America and Groton Partners are advising Royalty Pharma.

(Additional reporting

Bloomberg and Reuters)

Irish Independent

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