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Stephanie Sutton was an assistant editor at Pharmaceutical Technology Europe.
Alkermes purchased Elan?s Elan Drug Technologies (EDT) unit in a cash and stock transaction worth approximately $960 million. The two companies will be merged into a new holding company in Ireland under the name Alkermes.
Alkermes purchased Elan’s Elan Drug Technologies (EDT) unit in a cash and stock transaction worth approximately $960 million. The two companies will be merged into a new holding company in Ireland under the name Alkermes plc.
A press statement explained that Elan will receive $500 million in cash and $31.9 million in ordinary shares of the new company’s common stock. Alkermes believes that the transaction will be immediately accretive to its cash earnings. The combined company is expected to have annual growing product, royalty, and manufacturing revenues in excess of $450 million.
“The merger will be financially transformative and create a profitable, global biopharmaceutical company with a diversified central nervous system product portfolio and a strong foundation for growth,” Richard Pops, chairman, president, and CEO of Alkermes, said in the statement. “This merger will bring the scale and resources for strategic and balanced investment across the whole product continuum, from [research and development] innovation to clinical development, to world-class manufacturing and commercial expansion.”
According to reports from Reuters and Bloomberg, Elan had been trying to find a buyer for its EDT unit since 2008, but ran into problems when the economic crisis occurred. Now that the unit has a buyer, Elan has achieved several of its long-standing strategic and financial objectives. “It enables us to reduce the debt on our balance sheet and further improve our capital structure, increases operating leverage, [and] allows for additional focus and continued disciplined investment in a broad array of opportunities within the neurology space from a scientific, clinical, and product point of view,” explained Kelly Martin, CEO of Elan.
Pops will head the new company, while Shane Cooke, the current executive vice-president and head of EDT, will become president of the new Alkermes. The board will include members of the current board of Alkermes, but Elan will have the right to appoint one independent director if it maintains a 10% stake in the company. The deal requires approval from Alkermes’s shareholders and the regulatory authorities, but is expected to close in the third quarter of 2011.