Sunday 25 March 2018

Elan's board rejects Royalty Pharma’s revised $6.7bn offer

THE board of directors of Elan Corporation have unanimously rejected another takeover offer from Royalty Pharma and has instructed its financial advisers to consider several “unsolicited corporate enquiries.”

In a second offer increase in its on-going efforts to buy the Irish biotechnology firm, Royalty Pharma, a forerunner in the biopharmaceutical industry,  raised its bid by 5pc last week. The new bid potentially values each Elan share at as much as $15.50 if the company’s multiple sclerosis drug Tysabri meets specific sales and development goals.

According to Royalty Pharma, the contingent value rights – potentially $2.50 a share – are linked to the outcome of several events including regulatory approval for the expansion of Tysabri, the achievement of global sales of $2.6 billion in four consecutive quarters before the end of 2015, and the realisation of $3.1 billion in sales in four quarters by 31st December 2017, Royalty Pharma said.

However, in a statement today, Elan’s board describe the bid as “wholly inadequate” for its shareholders. “Royalty Pharma’s revised offer continues to grossly undervalue Tysabri,” it said.

“Both the board and executive management are aligned in exploring all opportunities that maximize the full value of the company for its shareholders.”

Furthermore, Elan’s board executives are recommending that its shareholders vote in favour of four transactions at their upcoming Extraordinary General meeting (EGM) in an effort to improve the P&L, diversify the business and allow the company to gain exposure to mid-to-late stage pipeline.

The proposals include a $1 billion investment in Theravance’s royalties, a $340 million takeover of Vienna-based AOP Orphan Pharmaceuticals AG, the spin-out of an experimental drug called ELND005 for Alzheimer’s disease to Speranza Therapeutics and a $200 million share repurchase program.

In response, Royalty Pharma has stated that this frenetic jumble of value-destructive” transactions have been proposed with the intention of deterring its acquisition of Elan – and have advised shareholders against voting for the transactions.

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