Royalty ups ante on bidding for Elan; Elan remains unmoved

Potential price for Elan reaches $8 billion as the company prepares for extraordinary general meeting this month and looks toward finalizing several deals with other companies while largely dismissing takeover attempt

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DUBLIN—As it gets ready for its extraordinarygeneral meeting on June 17, ElanCorp. got news of a revised bid from Royalty Pharma, which is seeking to acquire Elan—by hostilemeans if necessary—for a total that now reaches a potential $8 billion.
Royalty raised its bid on June 7—the third bid now—afterjust 7.5 percent of the target company's shareholders accepted its previousoffer, looking to benefit from royalties that Elan will gain from multiplesclerosis drug Tysabri. Royalty is now offering $13 in cash per share, up from $12.50before, with the added lure of a contingent value right worth as much as anextra $2.50 per share if Tysabri passes certain sales milestones.
Elan's extraordinarygeneral meeting will be focused in large part on shareholderpotentially approving a number of aggressive business strategies that Elanmaintains are part of its long-term strategic plan but that many think might bedriven more to secure shareholder confidence in the short run and dissuade Royaltyfrom continued acquisition overtures.
Among the most recent proposed moves are to acquire AOP Orphan, a private, orphan disease company headquarteredin Vienna, Austria, and to acquire 48 percent of Newbridge Pharmaceuticals, a private company headquarteredin Dubai, United Arab Emirates. In addition,
Theravance Inc. and Elan had entered into a proposedroyalty participation agreement just before those other two deals wereannounced under which Elan would spend $1 billion for a participation interestin potential future royalty payments related to four respiratory programs inwhich Theravance partnered with GlaxoSmithKline PLC: Relvar Ellipta/Breo Ellipta, AnoroEllipta, MABA (Bifunctional Muscarinic Antagonist-Beta2 Agonist) monotherapy(GSK961081, or MABA '081), and vilanterol (VI) monotherapy. Elan is alsolooking to divest its ELND005 asset to Speranza Therapeutics and plans a $200million share repurchase.
In May, Royalty said it would withdraw its $6.4billion offer for Elan if shareholders approve certain of these measures, suchas the acquisitions and the royalty participation deal. Presumably, this latestincrease in the bid is designed to make a last-minute push to woo shareholderaway since Royalty will theoretically throw in the towel soon if shareholders takethe very likely route of approving Elan's proposed business deals.
June 10 saw Elan's board of directors unanimously "andwithout reservation" reject the most recently revised tender offer.
In an official statement, Elan said, in part, that "theboard of directors of Elan, in response to several unsolicited corporateenquiries, has instructed its advisors to assess any and all strategicinterests in the company that reflect the intrinsic value of the totality ofElan's business platform. Both the board and executive management are alignedin exploring all opportunities that maximize the full value of the company forits shareholders. As stated on May 29, 2013, by Mr. Robert A. Ingram, chairmanof the board, any credible proposal—in terms of full and fair value—will beconsidered by the company."

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