Elan Corp snubs Royalty Pharma, goes ahead with $1 bn share buyback program
09 Mar 2013
Irish neuroscience-focused biotechnology company Elan Corp has snubbed Royalty Pharma's $6.6-billion unsolicited takeover offer and is planning to go ahead with $1 billion share buyback program next week.
The Dublin-based drug maker brought forward its earlier than previously planned share buyback to next week and said that it would commence a tender offer from Monday 11 March by way of a ''Dutch auction'' for which it has set a price range of $11.25 to $13.00.
New York-based Royalty Pharma, which buys royalty streams of patented drugs, had on 26 February launched a hostile $11 per share bid for Elan, after it failed to get a response from Elan's management to its informal offer made on 18 February.
The offer was at a mere 4-per cent premium to Elan's closing price on 25 February on the New York Stock Exchange.
The hostile bid came just three weeks after Elan sold its interests in its multiple sclerosis treatment drug Tysabri, to its US partner Biogen Idec for $3.25 billion plus multi-tiered future royalties on sales of the drug. (See: Biogen Idec to pay Elan Corp $3.25 bn plus for full rights of multiple sclerosis drug Tysabri)
Under the royalties plan, Elan will receive from Biogen Idec 12 per cent of sales for the first 12 months and after that, 18 per cent on sales up to $2 billion and 25 per cent on sales of more than $2 billion.
