Monday 23 October 2017

More flak from Schuler as Elan readies for sale

Roisin Burke

A former director and major shareholder at Irish pharmaceutical company Elan has again been heavily critical of the company as it readies itself for an open market sale.

"I would question whether [chief executive] Kelly Martin and the board are really serious about putting the company up for sale," Jack Schuler, a respected industry figure and former president of Abbott Labs, said last week.

Following private equity house Royalty Pharma's failed €5bn hostile bid last month, Elan put itself on the market. Royalty had intended to take part in that auction but has now backed out.

"Royalty Pharma has not been able to agree with Elan's advisers on the terms of its participation in the process," the firm's investor relations vice-president Alexander Perfall said.

"By Elan's advisers not agreeing sale participation terms with Royalty Pharma, I'm questioning the sincerity of the intention to sell," Schuler said. "If Elan achieves €11 a share [ie the offer price Royalty made in its hostile bid], it will be very lucky."

However, Elan's share price on the New York exchange was very close to €11 last week following the release of its six months results on Wednesday. An RBC Capital research report issued following the results valued the company at €10 per share.

Schuler also queried the €41m in legal fees attached to Elan's defence against Royalty Pharma's hostile bid that were revealed in its six monthly results on Wednesday. "How can one justify this figure?" he asked.

He criticised the €19m in fees attached to Elan's attempted deals with drug companies Theravance and AOP, which were voted down by shareholders and didn't happen.

"I have never heard of a company spending this type of money in such a short period where there is no deal," he said.

Buyers reported to have done due diligence on Elan in advance of possible bids include Forest Laboratories and Perrigo, while hedgefunder Daniel Loeb's Third Point has been building up a stake in the company.

In a letter to the 'Financial Times' last month, Schuler questioned the competence of the board and claimed planned transactions were 'value destructive'.

Elan has declined to comment on Jack Schuler's views.

Sunday Independent

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