Royalty Pharma – the US group circling Elan with a possible $6.6bn offer – has been told by the Irish Takeover Panel to make a formal bid for the Irish company by May 10, or walk away.
The 'put up or shut up' ultimatum comes more than five weeks after New York-based Royalty first told Elan shareholders that it was mulling over the $6.6bn (€5bn) bid. If it doesn't proceed with an offer, Royalty will be blocked for 12 months from making a further approach.
The Takeover Panel has imposed a deadline of the later of either May 10 or the 10th business day after which Elan settles a buyback programme it is already undertaking. That programme is expected to be settled with Elan shareholders by April 25.
Royalty said it was disappointed by the deadline and that the Elan board had refused to work with the New York firm to facilitate an offer being made to Elan shareholders. It said the Elan board had "instead sought to impose a deadline for Royalty Pharma to make such an offer without the benefit of due diligence".
"The refusal of the board of Elan to engage with Royalty Pharma risks depriving Elan shareholders of the opportunity to decide on the merits of the possible offer," said the US company.
The deadline was issued as Elan finalised the $3.25bn (€2.5bn) sale of its 50pc stake in multiple sclerosis treatment Tysabri to US partner Biogen Idec. Elan also said it was redeeming $600m in notes.
Tysabri is effectively the only product Elan retained after spinning off its drug development business last year and selling a technology unit for close to $1bn.
Elan is returning as much as $1bn (€780m) of the Tysabri proceeds to its shareholders via a share buyback and will use the remainder to make strategic investments and acquisitions. It has also committed to paying a twice-yearly dividend using royalties it will continue to receive from Tysabri sales.
Royalty Pharma has said it doesn't think Elan management have the track record required to make those investments and made an $11 indicative offer per Elan share to buy the Irish group. Shares in Elan opened at around $11.70 in New York yesterday.
The board of Elan, which includes chairman Bob Ingram and CEO Martin Kelly, said it welcomed the Takeover Panel's deadline. It reiterated that the Royalty Pharma indicative offer was "highly conditional" and "opportunistic".
The company has been attempting to drum up support among institutional Elan shareholders in the US and Europe for its takeover attempt. Royalty chief executive Pablo Legorreta had been hoping big shareholders would pressure Elan to open up its books to Royalty Pharma so it could undertake due diligence.
Royalty had hoped to meet most of Elan's biggest investors before a meeting next week at which Elan shareholders were set to vote on the $1bn share buyback scheme.
Drug firm Johnson & Johnson owns 18pc of Elan, while Fidelity Management & Research and its Fidelity Worldwide unit own a combined 8.9pc.