Royalty Pharma’s Offer Rejected by Elan

Elan Corp have confirmed that they have declined Royalty Pharma’s $11.25 per share acquisition bid, adding that the bid does not come near to what the drug maker is worth.

Last week, Royalty decreased their bid from a previous offer which could have reached as high as $12, depending upon the pricing of a $1 billion share buyback by the Irish company.

Royalty Pharma had advised Elan stockholders to tender their shares at around the $12 mark but their request fell on deaf ears.

“Put simply, the vast majority of Elan shareholders believe Elan shares are currently worth more than $13,” Berenberg Bank analyst, Adrian Howd, noted.

Elan has battled to keep their independence through a succession of manoeuvres intended to frustrate the bid, which is dependent upon 90% acceptances.

Johnson & Johnson accounted for 92.3% of all shares repurchased and sold at $11.25.  The result of the buyback was viewed by the majority of observers as a vote of confidence in the organisation’s current management, and Chairman Robert Ingram released a statement claiming that Royalty’s bid “grossly undervalues Elan’s current business platform and our future prospects.”

Ingram added that Elan’s board “unanimously and without reservation rejected the offer.”  The verdict was taken after “careful review and consideration” by management and with the assistance of external financial and legal advisors.

There is a possibility that Royalty may respond with an increased offer but a lot of analysts view this as unlikely.

Observers are now waiting for additional news regarding what type of acquisitions Elan are looking into, and are hopeful that the organisation may disclose more information when they announce first-quarter financials later this week.


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