05.03.2013 - Irish Elan has offered its shareholders 20% of its annual Tysabri revenues in order to fight off a US$6.55bn bid of US investor firm Royalty Pharma.
Elan said on Monday it would give shareholders 20% of future royalties from multiple sclerosis drug Tysabri, which it plans to sell to its U.S. partner Biogen Idec in a US$3.25bn deal. Last year Tysabri made US$1.6bn, an up of 8% compared to the year before. Analysts expect the sales of the antibody drug to grow further. The move is intended to fight off a take-over from U.S. investment firm Royalty Pharma, which made a €6.55 bn bid last week. Elan said that it would prefer giving US$1bn dividend to its investors and use the rest of the Tysabri money for strategic acquisitions. Instead of being dependent of one top-selling drug, Elan wants to broaden its pipeline and to gain more flexibility.
Elan said that the "unique" cash dividend policy would give shareholders the right to enjoy unlimited participation in the upside from Tysabri sales. "This provides Elan and our shareholders with significant near and longer-term benefits," stressed Elan’s CEO Kelly Martin. The Dublin-based company announced shareholders can expect the first of twice-yearly dividend payments in the fourth quarter of 2013, subject to the closing of the Biogen deal.
Despite Elan's rejection, Royalty plans to make its case to some of the drugmaker's largest shareholders later this week. Elan said most of its shareholders did not view Royalty's idea as worth consideration. "We simply don't view the Royalty indication of interest as credible. The vast majority of our investor base simply don't view Royalty's indication as worthy of any discussion," Chief Executive Kelly Martin told. "I wish Royalty well, they can do what they need to do, but we're not in any discussions with them at all on any topic and we don't see any need to have those discussions," stressed Martin.
Royalty Pharma, which buys royalty streams of patented drugs, is not giving up, however. "We are very serious about our offer," said CEO Pablo Legorreta. In fact, Royalty is seeking talks with „ a number of Elan's large shareholders.“
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