Elan drops NY lawsuit and rejects latest Royalty Pharma bid

Drug company Elan last night dropped a legal action in New York against Royalty Pharmaceuticals, the company locked in a €6.7 billion takeover battle for the business.

The case had been due for hearing today. Elan said it had dropped the case after Royalty supplied additional information on its plans for the company after any successful acquisition.

Earlier yesterday, Elan said it had other potential bidders had approached it.

"We have received unsolicited enquiries recently and we have instructed our advisors Citigroup to assess any and all real indications of interest that would reflect a proper valuation for the company," a spokesman for the company said.

Sources with direct knowledge of the situation said yesterday the interest came from a number of mid-sized drug companies expressed interest and added that a cash offer of $15.50 per share could be enough to secure its support for a bid.

Elan had earlier “unanimously and without reservation” rejected Royalty’s third bid of $13 cash per share plus an extra $2.50 contingent on multiple sclerosis drug Tysabri hitting certain sales milestones, saying it was still wholly inadequate for shareholders.

A person familiar with Royalty’s thinking said that if Elan were really willing to talk about a $15.50 per share cash offer, then “they ought to return a call (from Royalty).”

Proxies
Royalty for its part called on shareholders to return proxies ahead of a Wednesday deadline rejecting a series of transactions.

These include the $1 billion royalty rights deal with Theravance Therapeutics, the acquisition of a majority stake in speciality pharma business AOP Orphan, a smaller buy-in to a privately held company called Newbridge, the spinning off of its last remaining development drug ELND-005 and an additional $200 million share buyback.

Following clarification from the Irish takeover Panel last week, Royalty reminded investors that support for any of the transactions would lead to the lapsing of the $6.7 billion bid.
– Additional reporting, Reuters