Royalty bid for Elan now hinges on court action
ROYALTY Pharma's increased hostile bid for Irish drug company Elan has been thrown into disarray after shareholders voted in favour of a share buy-back arrangement.
Royalty's multi-billion dollar bid was conditional upon shareholders at the Dublin-based firm rejecting four resolutions put forward by Elan bosses at its EGM in Dublin yesterday.
While three were thrown out, a $200m (€150m) share repurchase programme was agreed.
Desperate to stay in the fight, Royalty last week won an Irish court injunction allowing it to appeal against a ruling that it cannot change the conditions attached to its offer.
Royalty says it meant its conditionality to apply to only the two resolutions relating to acquisitions.
The hearing to determine whether it can appeal is scheduled for tomorrow.
Royalty may be able to take another shot at Elan by taking part in the sales process kicked off by the Irish drug company last week.
Dublin-based Elan put itself up for sale in a last-ditch attempt to fend off a hostile bid by New-York-based Royalty.
The latest bid offered $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.
In an open letter to Elan's board, Royalty's chairman Rory Riggs said Royalty lacked confidence that the Elan sale process would be conducted in a fair manner.
"We welcome that you are now contemplating a sale of Elan but urge you to engage with Royalty Pharma today, rather than undertaking a lengthy, and we think likely fruitless, effort to find a buyer willing to offer more than we are," Mr Riggs said. "We believe Elan's shareholders should view your announcement of a sale process, and the likelihood that any such sale process will yield a better offer than Royalty Pharma's, with some scepticism for a number of reasons."
Elan's share price had risen 0.3pc by mid-afternoon yesterday to €10.10.
(Additional reporting Reuters)