Elan leadership gets shareholder thumbs-down on several matters; put company up for sale

Theravance deal for $1 billion, acquisition of AOP Orphan and divestiture of ELND005 are all rejected by shareholders, while the stock repurchase plan is approved

Jeffrey Bouley
DUBLIN—After fending off an unwanted takeover bid by Royalty Pharma for some weeks now, Elan Corp. suffered a few hits from shareholders June 17 as they voted against the Elan board and executives' desire to enter into a $1 billion deal with Theravance Inc., acquire an orphan disease company in Austria called AOP Orphan and divest its ELND005 asset to SperanzaTherapeutics.
 
On the other hand, shareholders approved the company's share repurchase program, and Elan noted that "inaccordance with the terms of the Royalty Pharma offer," the bid to acquire Elan has now lapsed.
 
This "lapse" is likely temporary, though. What it means is that Royalty Pharma had sought the approval from the Irish Takeover Panelto allow it to amend its offer so it would not lapse should the share repurchase program or the ELND005 transaction be approved byshareholders at the extraordinary general meeting of shareholders on June 17. On June 6, 2013, the Irish Takeover Panel had refusedto grant such approval, and Royalty Pharma has launched judicial reviewproceedings in the Irish High Court against the decision of the IrishTakeover Panel. Those proceedings are dueto be heard on June 19.
 
What is perhaps more interesting in all the back and forth with Elan and Royalty is that the measures shot down by shareholders seemed to be intended to bolster shareholder confidence, dissuade Royalty by making Elan too expensive to acquire or a combination of both. On the Friday just before the extraordinary general meeting, perhaps sensing that the shareholders might not go for those other, expensive measures to fend off Royalty, Elan announced that the company was for up for potential sale now.
 
As Elan noted in that Friday announcement, it is proceeding with a formal sale process "in light of theexpressions of interest received to date [from various companies]. As part of this process,Royalty Pharma will be invited to participate if they so wish." As it made the announcement, Elan also continued to urge shareholders to reject the current Royalty offer in hopes of getting a better one from it or from another company.
 
Reuters cited a source "close to the matter" as saying a bid as high as $15.50 per share in cash would be sufficient to draw Elan's interest. Interestingly, Royalty's most recent offer was for $13 per share and an additional $2.50 per share contingent value right if the blockbuster drug Tysabri hits certain sales milestones.
 

Jeffrey Bouley

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