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US investors offer USD6.5bn for Elan

Monday, February 25 10:26:00

US based RP Management, an investor in royalty streams from pharmaceuticals, said it's willing to buy Elan for about $6.5 billion after the Irish drugmaker failed to respond to RP's approaches.

There are substantial risks to Elan's plan to make acquisitions with the $3.25 billion it will receive from selling its stake in the Tysabri multiple-sclerosis drug to Biogen Idec Inc. (BIIB), the New York-based firm, known as Royalty Pharma, said in a statement today. The offer of $11 per American depositary receipt is 3.8 percent above Elan's closing price Feb. 22, and represents "the full value of Elan today," RP said.

The offer is a challenge to Dublin-based Elan's strategy of reinvesting the Tysabri proceeds, which will leave the company with virtually no operations. Chief Executive Officer Kelly Martin's plan to buy drugs that are on the market, late-stage experimental products or some early-stage clinical research projects drew skepticism from investors when it was announced Feb. 6. The company said Feb. 22 it also would buy back $1 billion of stock.

"While Elan's management has demonstrated its ability to execute several significant disposals, the current senior management team of Elan has not made any significant acquisitions or in-licensed any significant late stage products for Elan and thus does not have a track record of generating attractive returns from acquisitions or in-licensed products," Royalty Pharma said.