The announcement of the agreement — the deal is not expected to formally conclude until the end of the year — brings to an end months of speculation surrounding Elan’s future ownership, with the company having been the focus of a hostile approach from US intellectual property firm, Royalty Pharma. It also had a number of other unsolicited offers and had only last month formally put itself up for sale.
The likes of Allergan, Mylan and Forest Laboratories had been mentioned as possible suitors, with Perrigo’s name gaining weight in recent weeks.
The Michigan-based company — which has existed for nearly 130 years — has, through a cash and share offer, agreed to pay Elan shareholders $16.50 per share.
That price represents a 10.5% premium on Elan’s closing share price last Friday, and a 27% premium on the last offer tabled by Royalty and disregarded by Elan’s management. The price also betters some analysts’ own sale forecasts, and it seems to vindicate Elan’s constant snubbing of Royalty’s ‘undervalued’ approaches.
Both the Elan and Perrigo boards have unanimously approved the transaction, with Elan chief executive, Kelly Martin saying it marks a fair price for both parties.
“We believe this transaction is compelling for Elan shareholders and fully takes into account the value of Elan’s assets, including a large cash balance and a double-digit royalty claim on Tysabri — a blockbuster product that generated revenues of $1.6bn, last year, and has been growing at a compound annual growth rate of 19%,” commented Perrigo chief executive and chairman, Joe Papa.
“We believe the combination of Perrigo and Elan will create an industry-leading global healthcare company with the balance sheet liquidity and operational structure to accelerate our growth and capitalise on international market opportunities,” he added.
Elan’s management agree. Speaking yesterday, Elan’s current chairman, Bob Ingram, said Perrigo’s management team will only continue to grow and expand the combined business on a global scale.
“This is an excellent transaction for Elan shareholders and provides them with cash consideration as well as the opportunity to benefit from the potential upside value of the new company,” he added.