|Elan CEO Kelly Martin|
Elan's ($ELN) board of directors has rebuffed the most recent acquisition offer from Royalty Pharma, saying that the bid valued at $6.4 billion undervalues the Ireland-based biopharma group and robs investors of the best value for their shares. With its eyes on Elan's prized Tysabri royalty stream, Royalty made the most recent $12.50-per-share offer on Monday.
"This offer is no more than an opportunistic attempt to acquire our company at a substantial discount at our shareholders' expense," Elan Chairman Robert Ingram said in a statement. "Put simply, for Royalty Pharma to win, you our shareholders must lose. Accordingly, the board unanimously and without reservation rejects the revised Royalty Pharma offer."
The board's rejection is the latest move from Elan to stay independent after selling its 50% stake in its only money-making product, Tysabri, to Biogen Idec ($BIIB) in February for $3.25 billion and keeping a royalty stream on the multiple sclerosis therapy. Elan also ripped a page from the playbook at Royalty, which specializes in acquiring pharma royalties, and struck a $1 billion deal with Theravance ($THRX) last week to acquire a share of royalties on respiratory products.
This week Elan CEO Kelly Martin went further to refashion the company, changing the overall complexion of the company as fast as Royalty can issue new bids. Elan revealed a series of deals, including the $342.5 million buyout of Vienna-based AOP Orphan Pharmaceuticals, the $40 million spent to acquire a 48% stake in Dubai-based specialty drug group Newbridge Pharmaceuticals, and the spinoff of an experimental Alzheimer's therapy into a new company called Speranza Therapeutics.
As one might expect, Royalty has criticized Martin's moves as a ploy to stay independent. Yet Elan shareholders have balked at Royalty's offers, giving Martin more time to executive big-dollar deals. Elan has shared the spoils of its big Biogen deal with a $1 billion share buyback, which the company plans to follow up with the repurchase of $200 million in shares, Bloomberg reported.
Elan also plans to issue $850 million in debt, which would fuel Martin's acquisition strategy.
Elan aims to hold an extraordinary shareholder meeting on June 17 to give stockholders a chance to vote the latest string of acquisition deals, Bloomberg reported. Royalty's latest bid hinges on shareholders rejecting those transactions.