Elan directors reject Royalty Pharma takeover offer

Elan Corporation's board of directors has unanimously rejected a higher takeover offer from Royalty Pharma, an investor in royalty streams from pharmaceuticals, and instructed advisers at Citigroup Inc to assess several "unsolicited corporate enquiries."

Royalty Pharma last week raised its offer to buy Elan Corp by 5 per cent to $6.7 billion, the second increase in its attempt to take over the Irish biotechnology company.

The cash offer of $13 per American depositary receipt is higher than a previous bid of $12.50 and compares with the $13.44 closing price on June 7th.

The new bid potentially values each Elan share at as much as $15.50 if the multiple sclerosis drug Tysabri meets certain sales and development goals.

If all three targets are met, Royalty would pay a contingent value right of $2.50 a share, for a total of $8 billion.

“Royalty Pharma’s revised offer continues to grossly undervalue Tysabri,” Elan’s board said in a statement. “The Elan board and executive management remain unanimous in recommending the four previously announced transactions.”

Elan chief executive Kelly Martin, a former Merrill Lynch and Co banker, has announced deals including a $1 billion investment in Theravance Inc's royalties.

Elan shareholders will vote on the proposals on June 17th, which will determine whether Dublin-based Royalty will go ahead with its unsolicited offer.

Tysabri’s Performance Elan is also considering other offers, the board said today.

“Both the board and executive management are aligned in exploring all opportunities that maximize the full value of the company for its shareholders,” it said.

Bloomberg