Elan Board Rejects Multibillion Takeover Bid from Royalty Pharma - Pharmaceutical Technology

Latest Issue
PharmTech

Latest Issue
PharmTech Europe

Elan Board Rejects Multibillion Takeover Bid from Royalty Pharma
Elan urges its shareholders to reject bid in an upcoming meeting on June 17.



The board of directors and executive management of the pharmaceutical company Elan have rejected a revised bid of $15.50 a share or approximately $8 billion by the pharmaceutical company Royalty Pharma. In turning down the bid, Elan says the offer undervalues the company and has urged Elan shareholders to reject the bid in a shareholder meeting to be held on June 17, 2013.

Royalty Pharma made an unsolicited revised bid to acquire all the shares of Elan for $13.00 per share plus up to an additional $2.50 per share in contingent value rights for a total bid price of $15.50 a share. In rejecting the bid, Elan said in a June 11, 2013 statement the offer was “wholly inadequate for Elan shareholders,” and in a letter to its shareholders, urged them to reject the offer at an upcoming extraordinary general meeting to be held on June 17. A key point of contention is the valuation of Elan’s participation in the multiple-sclerosis drug Tysabri (natalizumab). Earlier this year, Elan restructured its collaboration with Biogen Idec for Tysabri, in which Elan received a $3.25-billion payment plus an ongoing royalty interest in the drug. Elan says that the royalty and cash alone value Tysabri to be worth at least $15.50 per share or as much as $20.80 per share, thereby undervaluing Elan by as much as $4.3 billion.

In addition to voting on the Royalty Pharma offer, Elan shareholders will also be voting on whether to approve three earlier deals of Elan: a $1-billion deal with the US pharmaceutical company Theravance that was announced in May 2013; a proposed EUR-263.5 million ($350-million) acquisition of AOP Orphan Pharmaceuticals, a Vienna-based pharmaceutical company focused on rare and orphan diseases; and the divesture of Elan’s ELND005, a drug in clinical development for treating separate indications of Alzheimer's disease and bipolar disease to Speranza Therapeutics. In the Theravance deal, Elan would pay $1 billion in a royalty-participation agreement in which Elan would receive a 21% stake in potential future royalty payments related to four respiratory programs in which Theravance is partnered with GlaxoSmithKline.

Elan’s board and executive management said it is “exploring all opportunities that maximize the full value of the company for its shareholders” and that it will consider other offers for the company.

In response, Royalty Pharma issued a statement to say that subsequent deals by Elan, including the deals involving Theravance, AOP, and Speranza, as well as share repurchase transactions “do not come close to replacing the earnings that Elan gave up by selling half of its Tysabri interest,” and urged Elan shareholders to vote against the resolutions at the upcoming shareholders’ meeting.

ADVERTISEMENT

blog comments powered by Disqus
LCGC E-mail Newsletters

Subscribe: Click to learn more about the newsletter
| Weekly
| Monthly
|Monthly
| Weekly

Survey
What role should the US government play in the current Ebola outbreak?
Finance development of drugs to treat/prevent disease.
Oversee medical treatment of patients in the US.
Provide treatment for patients globally.
All of the above.
No government involvement in patient treatment or drug development.
Finance development of drugs to treat/prevent disease.
26%
Oversee medical treatment of patients in the US.
12%
Provide treatment for patients globally.
10%
All of the above.
43%
No government involvement in patient treatment or drug development.
10%
Jim Miller Outsourcing Outlook Jim MillerCMO Industry Thins Out
Cynthia Challener, PhD Ingredients Insider Cynthia ChallenerFluorination Remains Key Challenge in API Synthesis
Marilyn E. Morris Guest EditorialMarilyn E. MorrisBolstering Graduate Education and Research Programs
Jill Wechsler Regulatory Watch Jill Wechsler Biopharma Manufacturers Respond to Ebola Crisis
Sean Milmo European Regulatory WatchSean MilmoHarmonizing Marketing Approval of Generic Drugs in Europe
FDA Reorganization to Promote Drug Quality
FDA Readies Quality Metrics Measures
New FDA Team to Spur Modern Drug Manufacturing
From Generics to Supergenerics
CMOs and the Track-and-Trace Race: Are You Engaged Yet?

Click here