Elan considered buying Royalty before counter bid

Elan Corp considered buying New York investment firm Royalty Pharma last year, about six months before Royalty Pharma turned around with an acquisition proposal for Elan that’s now valued at about $5.7bn (€4.33bn).

The top executives from the two companies met in September, when they discussed Royalty Pharma’s interest in becoming a public company, which an acquisition by Elan would facilitate, New York-based Royalty Pharma said yesterday in its offer document. The parties agreed to further study potential combinations and meet again, Royalty Pharma said.

By October, Royalty Pharma chief executive Pablo Legorreta told Elan chief executive Kelly Martin and chairman Robert Ingram he thought his company’s market value was larger than Elan’s, and he was interested in acquiring Elan, according to the document. Mr Martin and Mr Ingram agreed to give the possibility some thought, according to the offer.

The document provides the first glimpse of the discussions that led to Royalty’s offer in February. Royalty raised the bid last month, and the offer is now valued at as much as $11.25 per American depository receipt. The Irish drugmaker’s board unanimously rejected the proposal last month.

The takeover offer challenges Mr Martin’s plan to embark on company acquisitions to expand its product portfolio after the failure of an experimental Alzheimer’s disease treatment.

The company declined to comment on the offer document, said Jonathan Birt, a spokesman for Elan at FTI Consulting.

Mr Martin told Mr Legorreta on Dec 9 that Elan’s board wasn’t interested in a sale to Royalty Pharma and wanted to re-open a discussion of the Irish company buying Royalty Pharma, according to the document.

Royalty’s offer for Elan is valued at about $5.7bn after Elan last month repurchased $1bn of stock.

Founded in 1996, Royalty Pharma owns royalty interests in 38 approved and marketed pharmaceutical products. In 2004, the firm bought Memorial Sloan-Kettering Cancer Center’s US royalty interest in Amgen’s Neupogen drug.

— Bloomberg

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