Elan sweetens shareholder offer

Elan has sweetened the terms on offer to shareholders under its $3.25bn (€2.5bn) disposal plan, as it aims to stave off an approach for the company from US investment firm Royalty Pharma.

Elan said yesterday it would give shareholders 20% of future royalties from multiple sclerosis drug Tysabri, in which it holds a 50% interest that it proposes selling to its US partner Biogen Idec.

Elan unveiled the restructuring a month ago, saying it would gain strategic flexibility to buy new assets. It already said it would return $1bn to shareholders. Those plans were put under question when New York-based Royalty made its $6.6bn (€5.08bn) approach last week, but Elan said most of its shareholders did not view the idea as worth consideration.

Elan chief executive Kelly Martin said neither the cash handout to shareholders nor the royalty plan were in direct response to Royalty’s approach. The CEO added he was referring to Elan’s outside investors and had not discussed the approach with Johnson & Johnson, which owns 18% of the group.

Royalty, which buys royalty streams of patented drugs, said last week it had not received a formal response from Elan and planned to spend the next few weeks calling Elan shareholders, according to a source familiar with the offer.

The group’s indicative approach, worth $11 per Elan share, could scupper Elan’s plans to spend the rest of the proceeds from the Tysabri deal on a series of acquisitions, effectively reinventing itself as a company.

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