Elan sells Athlone drug unit in $960m cash and equity deal

ELAN has agreed to sell its Athlone, Co Westmeath- based drug delivery unit EDT (Elan Drug Technologies) to US firm Alkermes for nearly $1 billion in a cash and equity deal.

The $960m (€667m) deal will safeguard EDT’s 450 employees in Athlone and help Elan paydown its debt and, as planned, fully focus on its main bioneurology business, which is led by its successful Tysabri multiple sclerosis drug.

While approval is needed from both the US regulators and Alkermes’ shareholders (Elan’s shareholders don’t have to vote on the matter) the sale is likely to be concluded by the end of the third quarter or the start of the fourth quarter.

Alkermes — a leading drug delivery player in the US since 1987 — will pay $500m in cash and give Elan a 25% stake in its business. The Irish company can sell that stake after a six-month lock-up period and is likely to do so partially, but will likely retain a certain stake in Alkermes for the long-term.

Elan also has the option to have a representative on Alkermes’ board, as long as its equity stake remains more than 10%, but Elan chief executive Kelly Martin said that while Alkermes will manufacture its products, Elan will keep its relationship at arms length.

Also as part of the deal, Elan’s current chief financial officer, Shane Cooke, will move to Alkermes, as president, and will be succeeded by Nigel Clerkin, who is on Elan’s finance team.

EDT will be subsumed into the Alkermes group, which will move its corporate headquarters from Massachusetts to Dublin and effectively become an Irish company. A stock listing in Dublin — along with its current Nasdaq listing — is also expected at some point.

While Elan has been looking at options for EDT for the last couple of years, it has been in talks with Alkermes for about six months, only reaching final agreement in the last few weeks.

Mr Martin said the deal marks the right fit for EDT and is the best outcome for Elan and its shareholders.

“Upon closing, this transaction aggressively advances a number of long-standing strategic and financial objectives for Elan. Namely, it enables us to reduce the debt on our balance sheet and further improve our capital structure,” he added.

He also said Elan will recoup the loss to its bottom line, from selling EDT, within 12 months due to strong sales of Tysabri.

Alkermes chief executive Richard Pops said: “The merger will be financially transformative and create a profitable, global biopharmaceutical company with a diversified CNS (central nervous system) product portfolio and a strong foundation for growth.”

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