Royalty Pharma bids for Elan
26.02.2013 - Pharma IP investor Royalty Pharma has made a US$6,5bn take-over bid for Elan Corp. plc after the Irish company sold its bestseller Tysabri to Biogen Idec.
The bid came directly after Elan had sold its multiple sclerosis drug Tysabri (natalizummab) to its long-term partner Biogen Idec, securing the company US$3.25bn. On February 22nd, Elan said it planned a share buyback of US$1bn and will focus on acquisitions after having sold its bestseller. Additionally, the company announced it will refinance its US$600m in debt.
On February 25th, Royalty published a take-over offer of US$11 per share, valuing Elan at US$6.55bn, a 3.8% premium to Elan’s closing share price on February 22nd. Royalty said that it already attempted to start negotiations with Elan on February 18th, after offering the price to Elan’s management. Yesterday, the investor directly asked shareholders if they want to stay invested in a company that has nothing but cash and royalty streams from Tysabri.
Analysts however suggested that Elan would be worth more than US$15 per share. Elan’s Board confirmed the bid, but called the timing of the bid „highly conditional“ and a „proposal , which may or may not lead to an offer being made for the entire share capital of the company“. Pointing to the Tysabri deal, the management added that the company has been working „for more than a year on a number of strategic transactions that would be to the benefit of our public shareholders“. However, any credible proposal will be considered, said the management. After having spun off its antibody drug discovery arm Prothena Corp. plc, Elan is working with giants Johnson & Johnson and Pfizer Inc. on ELND005, a Phase II drug to treat Alzheimer’s disease.