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Royalty Pharma Proposes To Buy Ireland-based Elan

Royalty Pharma Proposes To Buy Ireland-based Elan
2/25/2013 5:56 AM ET

RP Management LLC, or Royalty Pharma Monday announced that it has made an indicative proposal to acquire the entire issued and to be issued share capital of Ireland-based biotechnology firm Elan Corp. Plc (ELN: Quote) for $11 per share for every Elan share and every Elan ADS.

The possible offer represents a cash premium of 12.6 percent to the current enterprise value of Elan, based on its closing share price on February 15, 2013 of $10.35 on the New York Stock Exchange.

Current enterprise value amounts $10.35 per share or $3.135 billion, while proposal enterprise value totals $11 per share or $3.531 billion.

Royalty Pharma said the contact related to the offer was made on February 18, with the chairman of the board of Elan, followed by a further meeting on February 20, but it has not yet received a formal response to its Proposal.

According to the firm, Elan has made a public announcement on February 22, discussing its standalone strategy and has not responded to Royalty Pharma's proposal. However, Royalty Pharma said it remains committed to working towards a recommended transaction.

Royalty Pharma stated that Elan shareholders have a choice to sell their Elan stock for a cash amount that Royalty Pharma believes reflects the full value of Elan today. In addition, Royalty Pharma believes that a successful acquisition strategy would require Elan to build an operating infrastructure and synergies from acquisitions.

Royalty Pharma added that Elan's management has executed several significant disposals, including sale of some or all of bapineuzumab, Elan Drug Technologies and Tysabri, but Elan has not made any significant acquisitions or in-licensed any significant late stage products.

Royalty Pharma intends to finance the possible offer through a combination of available cash and debt. The company said it is working with financial advisors led by J.P. Morgan and lenders led by BofA Merrill Lynch to put in place the necessary debt financing to consummate the possible offer.

Last Friday, Elan said it would initiate a share repurchase program of $1 billion after completing the restructuring of its Tysabri collaboration with U.S.-based biotechnology company Biogen Idec Inc. (BIIB). It was announced earlier this month that Elan would move from the current 50:50 business collaboration to an upfront payment of $3.25 billion and a double digit tiered royalty structure for the life of the complete Tysabri asset.

Elan's Board of Directors, executive management and key advisors have been working on a possible restructuring of the Tysabri relationship for years. The unlocking of a portion of the Tysabri asset value provides the firm with significant strategic flexibility.

The stock is up 9.40 percent in Dublin at 8.71 euros.

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by RTT Staff Writer

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