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Elan: Royalty Pharma Bid Falls Short

Mon, 06/03/2013 - 8:05am

Elan Corp PLC said Monday the latest acquisition offer it fielded from Royalty Pharma substantially undervalues Elan and the future revenue it will receive from the multiple sclerosis treatment Tysabri.

The Irish drugmaker also said in a formal response to Royalty's offer to buy it for $12.50 per share, or about $7.5 billion, that some transactions it announced recently will widen the gap between Royalty Pharma's "undervalued" offer and Elan's fair value.

Royalty is a privately held New York company that buys royalty interests in drugs and late-stage drug candidates. It made a new offer to buy Elan last month on the condition that shareholders vote against Elan's push to refocus its business with some recently announced acquisitions.

Royalty also had offered in February to buy Elan for $11 per share and later raised that bid to $11.25 per share. Its latest offer is scheduled to expire June 4.

But Elan said Monday that deal is not in the best interest of its shareholders.

"Royalty Pharma is a private investment firm whose business model is all about buying assets on the cheap and generating value for their private investors," the drugmaker said in a statement. "The Royalty Pharma revised offer is no more than a calculated attempt to acquire Elan at a substantial discount at the expense of our shareholders."

Royalty Pharma did not immediately return a call from The Associated Press on Monday morning seeking comment.

Elan recently closed a deal to sell its interest in the multiple sclerosis treatment Tysabri to Biogen Idec Inc., its former partner on the blockbuster drug, for $3.25 billion in cash and recurring royalty payments. Elan said Monday its Tysabri interest and its net cash alone are worth between $15.50 and $20.80 per share.

It also recently said it will pay about $338 million for a privately held Austrian drug developer and at least $110 million for stakes in two other companies. The company also will pay $1 billion for the right to future royalties from four respiratory treatments being developed by Theravance Inc. and GlaxoSmithKline.

Elan said Monday that those deals fit its strategy to "prudently diversify" the risks it faces.

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