Elan's Board of Directors has determined that the offer of privately-held investment firm, Royalty Pharma, through its shell subsidiary, Echo Pharma Acquisition, to acquire all of the shares of Elan for US$11.25 or less per share, substantially undervalues the company. As a result the Board unanimously and without reservation rejected the offer.
The Board will, in accordance with Irish Takeover Rules, communicate with shareholders again following publication of Royalty Pharma's formal offer document. In the meantime, Elan has advised its shareholders to take no action in relation to Echo Pharma's acquisition offer.
Thus far, in February, Royalty Pharma proposed to acquire Elan through an offer for US$11 for every Elan share and every Elan American Depositary Share. Elan's Board rejected this offer, and in April, Royalty Pharma came back with a new offer. Through Echo Pharma, Royalty Pharma offered the following offer price for each outstanding share and ADS of Elan:
â¢ US$12.00, if the strike price for Elan's previously-announced Dutch Auction is US$11.75 or US$12.00;
â¢ US$11.50, if the Dutch Auction strike price is US$11.50;
â¢ US$11.25, if the Dutch Auction strike price is US$11.25; and
â¢ US$11.00, if the Dutch Auction strike price is equal to or greater than US$12.25 and less than or equal to US$13.00, or upon the occurrence of certain other events.
In March, Elan announced details of a proposed US$1.0 billion share repurchase programme, which was to be effected through a tender offer that commenced on 11th March by way of a Dutch Auction. The price range was to be between US$11.25 and US$13.00. An Elan EGM held a few days before Royalty Pharma made its offer approved the conditions of the share repurchase programme with over 99 per cent approval.
Royalty Pharma's original approach to Elan with an acquisition offer came at the time that Elan had entered a restructuring phase, particularly regarding the multiple sclerosis drug, Tysabri (natalizumab). The BLA for Tysabri is owned by Biogen Idec, but the product was developed by Elan. In February 2013, Elan agreed to restructure the Tysabri collaboration; under the terms of the restructured agreement, Elan moved from the existing 50:50 business collaboration to an up-front payment and a double-digit tiered royalty structure. The agreement leaves Biogen Idec in full ownership of Tysabri and has required Elan to restructure its business; a process that led to Royalty Pharma's interest.