Elan board unreservedly rejects Royalty's increased tender offer

Ireland-based drugmaker Elan Corp (NYSE: ELN) says that its board of directors, after careful review and consideration and with the assistance of its executive management team as well as outside financial and legal advisors, has rejected the revised bid from privately held investment firm Royalty Pharma to acquire all of the shares of Elan for $13.00 plus up to an additional $2.50 per share in contingent value rights (CVR; The Pharma Letter June 10).

The value gap between the underlying value of Elan and the totality of its business platform and the Royalty Pharma bid remains significant and the $13.00 cash and $2.50 CVR structure continues to be wholly inadequate for Elan shareholders. The circumstances under which the CVR payments would be triggered would result in the higher end of the value range for Tysabri (natalizumab) as detailed by Elan on May 29, 2013.

The Elan board and executive management remain unanimous in recommending the four previously announced transactions that will be voted on during the upcoming Extraordinary General Meeting (EGM) to be held on June 17, which Royalty Pharma has been urging Elan shareholders to reject. These transactions, (Theravance royalty participation, addition of AOP Orphan business, divestment of ELND005 asset to Speranza Therapeutics and $200mm share repurchase) would simultaneously improve the Profit & Loss, diversify the business and allow Elan to gain exposure to mid-to-late stage pipeline, the Irish firm argues.