Investment firm Royalty Pharma, Monday increased its offer for Ireland-based biotechnology firm Elan Corp. plc (ELN) to $12.50 per share in cash. The increased offer follows the drug maker's announcement of several acquisitions and share buyback as a strategy to improve sales and fight against the takeover attempt.
The offer price of $12.50 per share is higher than the previous bid of $11.25 per share. The increased offer is fully financed, cash confirmed and not conditional on due diligence, Royalty Pharma said.
On April 22, Elan's Board of Directors had unanimously rejected the offer from Royalty Pharma.
Last week, Elan had announced a $1 billion royalty deal with pharmaceutical company Theravance Inc. (THRX). The company, today, announced the acquisition of Austrian rare drug specialist AOP Orphan for 263.5 million euros, and the purchase of a 48 percent stake in Dubai-based NewBridge Pharmaceuticals for $40 million.
In a statement, Royalty Pharma said it believes Elan dramatically overpaid in the Theravance transaction by agreeing to pay $1 billion for 21 percent of selected royalties owned by Theravance when all of Theravance was trading at $3.5 billion. The latest offer is conditional on Elan shareholders voting against the Theravance transaction and all deals announced today that are put to a vote, Royalty Pharma said.
Royalty Pharma said the Theravance deal was pursued in haste and without critical confidential information which could significantly impair the value of the asset.
Elan also announced today that it will buy back $200 million of its common shares, as well as issue $800 million of debt.
It was in February that Royalty Pharma made the initial proposal to acquire Elan for $11 per share. At that time, Elan's enterprise value amounted $10.35 per share or $3.135 billion, while the proposed enterprise value aggregated $3.531 billion or $11 per share.
The initial bid was made after Elan agreed to sell its stake in multiple sclerosis drug Tysabri to biotechnology company Biogen Idec Inc. (BIIB) for $3.25 billion in upfront payment.
ELN is currently trading at $12.11, up $0.43 or 3.73%, on a volume of 23.8 million shares, above the three-month average volume of 5.7 million shares.
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