Monday 18 December 2017

Elan's Kelly Martin set to make $40m from merger

Drug firm's board recommend Perrigo bid after hostile takeover bids

John Mulligan

John Mulligan

ELAN chief executive Kelly Martin is set to make as much as $40m (€30m) from the $8.6bn sale of the Irish drug company to US-based Perrigo.

After months of being hunted in a hostile takeover effort by New York-based Royalty Pharma, Elan's board of management said it was unanimously recommending a substantially better offer from Perrigo. The deal will be Ireland's biggest corporate takeover.

The new combined group will be headquartered in Ireland, slashing its tax bill.

Perrigo – which sells a host of generic drugs and consumer products and has an $11.8bn market capitalisation – has agreed to pay the equivalent of $16.50 for every Elan share in a mixture that includes $6.25 in cash and 0.07636 Perrigo shares. The offer, which has to be approved by shareholders, isn't expected to close until the end of the year.

Deutsche Bank said the price represented a 21pc premium to the deal offered by Royalty, which included a mix of cash and possible future payments based on sales of Tysabri. Elan sold its 50pc stake in the Tysabri multiple sclerosis drug this year to Biogen Idec for $3.2bn.

Elan put itself up for sale in June just before its shareholders rejected proposals that included a plan to invest $1bn to buy a 20pc stake of a royalty stream from drugs produced by a company called Theravance.

The sale process drew a number of interested parties.

Elan has undergone significant change in the past couple of years. Apart from selling its stake in Tysabri, from which it continues to receive royalties, it hived off its drug development business into a new company and sold its drug technology unit to Alkermes.

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Perrigo executive Joe Papa described the deal as a "really great day" for shareholders. He said the transaction would allow Perrigo to use Ireland as a gateway to Europe.

Mr Martin is expected to take part in an orderly handover of the Elan business to Perrigo before stepping aside.

Under the terms of his contract with Elan, and combined with share options he holds, the former Merrill Lynch banker is on track for a massive payday.

His contract stipulates that if Elan is sold, Mr Martin is entitled to a payment of three times his annual salary and expected bonus. That will amount to about $6.7m. He will also get the use of an office and full-time secretary for up to three years. Additionally, he will be entitled to "career transition assistance".

He has 338,452 shares now valued $5.6m and also has about 6.8 million share options and restricted stock units with various exercise prices. Under the Perrigo deal, the options immediately vest and become exercisable with the holder of being paid whatever amount is applicable under the deal.

Irish Independent

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