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Royalty Pharma mulls bid for Elan

Follows Biogen’s $3.25bn acquisition of Tysabri from Elan

Royalty PharmaFresh from negotiating a $3.25bn windfall from partner Biogen Idec, Elan has become the target of a possible takeover bid by US company Royalty Pharma.

Privately-held Royalty Pharma specialises in buying up intellectual property assets in the pharma sector, generating revenues from royalty interests in more than 30 approved or late-stage drugs.

The company's move for Elan comes after the Irish drugmaker signed over rights to multiple sclerosis therapy Tysabri (natalizumab) to Biogen Idec in a deal that netted it $3.25bn upfront and a royalty steam.

Elan has already said it would return $1bn to shareholders and refinance debt, with analysts suggesting that a push for liquidity meant some form of merger or acquisition may be on the cards.

Royalty Pharma said in a statement issued this morning that it met with Elan's management last week to propose a $11-per-share offer for the pharma company - a 12.5 per cent premium to its closing price on February 15 - and was "surprised" that Elan's subsequent statement about the Biogen Idec deal had made no mention of its approach.

The offer would value Elan at more than $6bn but is only around 4 per cent higher than the company's closing share price last Friday of $10.58.

The company said it was effectively offering Elan shareholders a "simple and clear choice": remain an investor in a company whose material assets will consist of cash and Tysabri royalties while management looks for other opportunities, or sell for a cash amount.

"The risks and lack of earnings visibility associated with Elan's acquisition and in-licensing strategy are substantial," claims Royalty Pharma in its proposal document, which stresses this is not yet a firm intention to make an offer.

At the time of writing Elan had not yet responded publicly to the proposal statement from Royalty Pharma.

25th February 2013

From: Sales

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