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Perrigo agrees $8.6bn deal to buy Elan

Ends months of speculation about fate of Irish pharma company

Elan Pharma

Speculation about the future of Elan seems to have ended with the news that US generic drugmaker Perrigo has agreed an $8.6bn deal to acquire the Irish pharma company.

The offer - which has been accepted by Elan's board - brings to an end an ill-natured takeover battle which saw Elan resort to legal action to fend off hostile bids from US company Royalty Pharma.

Perrigo specialises in over-the-counter (OTC) and generic medicines - as well as making active pharmaceutical ingredients (APIs) - and has been growing quickly in recent years thanks to a series of acquisitions that have expanded and diversified its portfolio, including four in the last 12 months.

It has recently started shifting into speciality medicines, for example spending more than $280m buying the UK's Rosemount Pharma, and the deal for Elan takes it even further up the path towards a research-based pharma business.

The prize for winning Elan includes royalty rights to blockbuster multiple sclerosis (MS) treatment Tysabri (natalizumab), which was sold to Biogen Idec in a deal that also netted the Irish company $3.3bn upfront.

Elan used some of the proceeds for a £1bn ($1.54bn) deal with Theravance for access to royalties from four of its respiratory drugs, and the recent purchases of two private firms - AOP Orphan Pharmaceuticals AG and NewBridge Pharmaceuticals - to bolster its in-house pipeline.

Perrigo said the transaction will create "a diversified platform for further international expansion", noting that the combined company will be incorporated in Ireland to allow it to tap into the country's favourable corporate tax regime, which at 12.5 per cent is much lower than the 35 per cent levied on US companies.

The deal is expected to result in more than $150m in recurring after-tax annual operating expense and tax savings, said the two companies, noting that saving would come from "the elimination of redundant public company costs while optimising back-office support and … global R&D functions".

Reuters reported last week that Perrigo and Forest Laboratories were planning takeover bids for Elan, while other companies rumoured to be interested in the firm included Allergan, Mylan and Endo HealthSolutions.

Perrigo chief executive Joe Papa said its bid "fully takes into account the value of Elan's assets, including a large cash balance and a double-digit royalty claim on Tysabri".

The US firm is funding the deal, which still needs formal approval from antitrust regulators, with cash and $4.35bn in bridge financing from Barclays and HSBC.

29th July 2013

From: Sales



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