Irish bio-tech company Elan looks set to be sold, with management sensationally announcing yesterday that it has authorised a formal sale process to commence.

European stock markets reacted badly to the resignation of the Royal Bank of Scotland chief executive, Stephen Hester, and the indication that central banks may end their support of economies.

As much as $2bn (€1.5bn) could be wiped off Elan’s market value if its shareholders reject US firm, Royalty Pharma’s takeover advances next week, brokers have claimed.

Elan says it has received several unsolicited corporate enquires in the wake of high-profile advances from US intellectual property firm Royalty Pharma.

US intellectual property firm Royalty Pharma has further increased its bid for Irish biotechnology company Elan to $13 (€9.80) per share.

A legal action brought by pharmaceutical firm Elan aimed at stopping Royalty Pharma from distributing a statement to Elan’s shareholders is no longer proceeding, the High Court heard yesterday.

Elan has warned its shareholders that they could stand to receive little or no financial reward if US firm, Royalty Pharma succeeds in its attempt to buy the company.

Royalty Pharma has raised its offer to buy Elan after the Irish drug maker announced several acquisitions to boost revenue and resist the bid.

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 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).

Elan has around $2 billion (€1.54bn) to spend on investments as it looks to rebuild its asset portfolio following the sale of its headline asset and revenue generator Tysabri.

Elan has rejected Royalty Pharma’s near €7bn takeover approach, saying the offer substantially undervalues the company and doesn’t account for the Irish firm’s future prospects.

Royalty Pharma’s sweetened bid for Irish drugmaker Elan heaps pressure on Elan’s management to open its books to the US investment firm in the hope of a better offer, analysts and shareholders said yesterday.

Elan shareholders have unanimously voted in favour of the company’s share buyback plan, which will see nearly a third of the proceeds of its sale of multiple sclerosis drug Tysabri returned to investors.

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 has said it will consider any credible takeover proposal made to the company, but noted “the heavily conditional nature” and “highly opportunistic timing” of Royalty Pharma’s announcement that it has made an indicative proposal to buy the biotech firm for $6.6bn (€4.97bn).