Reuters – Royalty Pharma Makes $6.6B Bid for Elan

Investment firm Royalty Pharma has made a $6.6 billion bid approach to Elan, seeking to scupper the Irish drugmaker’s plan to spend most of the proceeds from a major drug sale on deals and instead give the money to shareholders, Reuters reported. Royalty Pharma, which invests in royalty streams from pharmaceuticals, said on Monday it planned to offer $11 per share, a premium of 12.6 percent based on the $10.35 closing price of Elan’s shares on Feb 15 on the New York Stock Exchange, where the company has its primary listing.

(Reuters) – Investment firm Royalty Pharma has made a $6.6 billion bid approach to Elan, seeking to scupper the Irish drugmaker’s plan to spend most of the proceeds from a major drug sale on deals and instead give the money to shareholders.

Royalty Pharma, which invests in royalty streams from pharmaceuticals, said on Monday it planned to offer $11 per share, a premium of 12.6 percent based on the $10.35 closing price of Elan’s shares on Feb 15 on the New York Stock Exchange, where the company has its primary listing.

Elan announced earlier this month it would raise more than $3.25 billion by selling its interests in its main drug, multiple sclerosis (MS) treatment Tysabri, to U.S. partner Biogen Idec and effectively reinvent itself by splashing most of the cash on acquisitions.

However, Royalty Pharma said the risks and lack of earnings visibility associated with this plan were substantial, prompting it to offer Elan shareholders a “simple and clear choice” with an offer it said represented the full value of Elan today.

Royalty Pharma said it had not received a formal response from Elan, but had been unsuccessful in its efforts to engage with the company since making contact with the firm on Feb 18.

It added it was “surprised” by Elan’s public announcement last Friday to buy back some of its shares because it did not address the proposed offer.

Elan shares in Dublin were up over 9 percent at 8.70 euros ($11.45) by 1030 GMT.

Elan, in which U.S. group Johnson & Johnson is an 18 percent shareholder, could not be reached for immediate comment.

Royalty Pharma last year paid $761 million for a stake in Biogen’s Tecfidera MS treatment.

Following the sale of Tysabri, Elan will still receive a royalty on its sales.

Royalty Pharma said it planned to finance the possible offer through a combination of available cash and debt.

($1 = 0.7598 euros)

(Reporting by Stephen Mangan; Editing by Keiron Henderson and Mark Potter)