Elan's ($ELN) board of directors has rejected an $11.25-per-share bid by Royalty Pharma, sending a message along that it views the offer as far short of what the company is worth. And some analysts say that at this point there's not much likelihood that Royalty can win out in the end.
"The offer from Royalty Pharma grossly undervalues Elan's current business platform and our future prospects. As a result the board unanimously and without reservation rejected the offer," said Elan Chairman Robert Ingram in a statement.
Getting the shareholders to tender their stock in the company is clearly going to require more money on the table. Royalty had reduced its per-share offer after Elan completed a billion-dollar buyback of shares. And it's not likely to be enthusiastic about paying a significant premium now.
"Put simply, the vast majority of Elan shareholders believe Elan shares are currently worth more than $13," Berenberg Bank analyst Adrian Howd wrote in a note, according to a story by Reuters. "As we stand today, Royalty Pharma would seemingly have to offer in excess of $13 ... We see this as unlikely."
The next move may belong to Elan. Now that Biogen Idec's ($BIIB) payout on Tysabri is burning a hole in its pocket, the company intends to start doing a slate of new deals in order to rebuild the company--now little more than a shell. Those discussions have already been underway and the market is looking now for some clarity on what's ahead for Elan.
- here's the press release
- get the Reuters report