In the latest twist in Royalty Pharma's plot to buy Elan, the business press has caught wind that Royalty may decide to revive its pursuit of Elan ($ELN) with the help and financial support of a partner. This scenario involves multiple factors, including Elan's willingness to take offers from joint bidders, and none of the players are commenting on the record about the situation.
For four months or so, Royalty has sought a buyout of Ireland's Elan in an effort to add royalties from sales of the blockbuster MS therapy Tysabri to the U.S. company's portfolio pharma royalty streams. Elan effectively thwarted Royalty's latest bid of up to $8 billion, which expired earlier this month. Despite Royalty abandoning its last bid, Elan's stock price has stayed strong amid speculation in the investment community that any one of several U.S. drugmakers could make bids of their own.
Elan offers buyers an attractive opportunity to not only gain rights to Tysabri royalties but also the company's low 12.5% corporate tax rate, which is enjoyed by firms based in Ireland. In fact, this tax benefit factored into Alkermes' ($ALKS) buyout of Elan's drug technologies business in 2011, a deal that relocated Alkermes' headquarters from Massachusetts to Ireland. According to Jefferies analyst Corey Davis, Vertex ($VRTX), Regeneron ($REGN), Alexion ($ALXN), Mylan ($MYL), Zoetis and Perrigo could step up with offers.
As sources tell Reuters, Mylan, Endo, Forest ($FRX) and Allergan ($AGN) are weighing potential bids for Elan. One of those companies could bring on Royalty as a partner in the buyout, but there are conditions that would have to be met. Under buyout rules in Ireland, Royalty has exhausted its own right to seek a takeover of Elan for 12 months. Royalty would also have to enter Elan's bidding process, announced June 14, to enter the running again.