WESTON (dpa-AFX) - Irish biotechnology firm Elan Plc. (ELN) Monday said that its Board of Directors has rejected the revised bid from privately held investment firm Royalty Pharma saying it was inadequate. The revised offer was for $13 plus up to an additional $2.50 per share in contingent value rights or CVR.
'The value gap between the underlying value of Elan plc and the totality of its business platform and the Royalty Pharma/Echo bid remains significant and the $13.00 cash and $2.50 CVR structure continues to be wholly inadequate for Elan shareholders,' Elan said.
It was in February that Royalty Pharma made the initial proposal to acquire Elan for $11 per share, through its subsidiary Echo Pharma Acquisition Limited, that was revised several times.
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.
The circumstances under which the CVR payments would be triggered would result in the higher end of the value range for Tysabri as detailed by Elan on May 29, the company noted. Elan urged its shareholders to take no action in relation to the offer.
After Royalty Pharma began its pursuit of Elan, in May, the drugmaker had announced a $1 billion royalty deal with pharmaceutical company Theravance Inc. (THRX).
The company also agreed to buy Austrian rare drug specialist AOP Orphan for 263.5 million euros, and purchase of a 48 percent stake in Dubai-based NewBridge Pharmaceuticals for $40 million. Elan also had announced buyback of $200 million of its common shares.
Following this, 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.
'Elan has laid out its vision for the 'New Elan' and it looks like it will be a highly uncertain future for stockholders given some of the decisions made by management, which seem to us to be designed primarily to fend off Royalty Pharma,' Pablo Legorreta, Chief Executive Officer of Royalty Pharma, said at that time.
Legorreta also said in May that claim made by Elan's board that the Tysabri royalty it owns is worth between $6.1 billion and $6.6 billion, is unrealistic.
Elan said today its Board and executive management remain unanimous in recommending the four previously announced transactions - Theravance royalty participation, addition of AOP Orphan business, divestment of ELND005 asset to Speranza Therapeutics and $200mm share repurchase - that will be voted on during the upcoming Extraordinary General Meeting on June 17.
According to Elan, these transactions would simultaneously improve the P&L, diversify the business and allow the company to gain exposure to mid-to-late stage pipeline.
The Board has also instructed its advisors to assess all strategic interests in the company that reflect the intrinsic value of the totality of Elan's business platform. Any credible proposal will be considered by the company and Citigroup will take the lead in coordinating these discussions.
Elan's financial advisors are Citigroup, Davy Corporate Finance, Morgan Stanley and Ondra Partners. Its legal advisors are A&L Goodbody and Cadwalader, Wickersham & Taft LLP.
ELN closed higher by 6 percent at $13.44 on Friday.
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