US drugmaker Perrigo to buy Elan for $8.6 billion
Ireland’s low corporate tax rate will cut US firm’s effective tax rate to the ‘high teens’
Elan put itself up for sale last month after rejecting three hostile bids from US investment firm Royalty Pharma.
US generic drugmaker Perrigo has agreed to buy fellow drug company Elan for $8.6 billion (€6.48 billion) in a deal that will hand it royalty rights from a blockbuster treatment and tax savings from being domiciled in Ireland.
Elan put itself up for sale last month after rejecting three hostile bids from US investment firm Royalty Pharma in a bitter takeover battle that involved injunctions, court hearings and a war of words.
Michigan-based Perrigo, which manufactures over-the-counter pharmaceutical products for the store brand market, will pay $6.25 per share in cash and $10.25 per share in stock, a premium of about 10.5 per cent over Elan’s closing price on Friday.
“We’re excited by what it means for the international expansion. We think it’s financially compelling and when you put it together with an Irish domicile that has operational tax synergies, we think it’s a really compelling story,” Perrigo chief executive Joe Papa said.
Elan is especially appealing for companies like Perrigo that can easily move their headquarters abroad because of the very low 12.5 per cent corporate tax rate in Ireland, compared to 35 per cent in the United States.
Papa said the deal meant that Perrigo - which will fund the deal using $4.35 billion in bridge financing from Barclays and HSBC plus cash - would lower its effective tax rate to the high teens from around 30 per cent currently.