The move could see Royalty pay at least $6.7bn for Elan, but possibly as much as $8bn, some $2bn more than it initially offered when launched its bid in February.
Elan was making no comment on the matter yesterday except to say that it will honour Irish takeover law and assess the announcement before advising shareholders “accordingly”.
In the meantime, it is “strongly” advising shareholders to take no action regarding the Royalty offer.
Prior to the increased bid, the Dublin-headquartered firm last Monday warned that its shareholders could face “significant harm” if they didn’t oppose Royalty’s advances, meaning any financial benefit from a takeover could be enjoyed solely by the US firm’s existing private investors.
At its AGM less than a fortnight ago, Elan told shareholders the most recent Royalty bid — of $12.50 per share — “substantially” undervalued the company and that with significant future royalty revenues due from the Tysabri multiple sclerosis drug (amounting to a conservatively estimated $484m-$611m annually from 2016), a value of $15.50-$20.80 would be more realistic.
While dismissive of Royalty’s approaches to date, Elan has always maintained it would be open to “credible” approaches from other parties, including Royalty.
Elan’s shares were trading at just under €10 in Dublin yesterday, up by over 5% on the day.
Royalty’s latest offer potentially values Elan at $15.50 per share and is heavily reliant on Tysabri meeting a number of sales and development targets — specifically the achievement of global sales of $2.6bn in four consecutive quarters before the end of 2015 and $3.1bn over the same timeframe by the end of 2017.
It also emerged yesterday that only 7.5% of Elan’s shareholders had accepted Royalty’s $12.50 bid for the company by the original Jun 6 deadline for acceptance.
That deadline has now been extended to Jun 21, with the acceptance threshold being 50% of shareholders.
Elan shareholders are due to meet on Jun 17 to vote on a number of transactions and proposals recently set out by management — including Elan buying a number of assets, launching a debt offering, and giving more money back to investors via an additional share buyback.