Elan to pay $1bn for royalty share

Elan agreed to pay $1bn (€770m) for a share of the royalties on new drugs from Theravance as it tries to persuade shareholders to spurn a takeover offer by Royalty Pharma.

Elan will receive a total of 21% of the royalties earned by Theravance from GlaxoSmithKline on the four respiratory medicines, and 20% of that income stream will be paid to Elan shareholders as a dividend.

The transaction is subject to shareholder approval. Theravance shares rose the most in almost a month.