Royalty's $8B offer wilts after Elan prevails in blocking bid

Royalty Pharma signed the death certificate on its $8 billion bid for biotech Elan ($ELN), withdrawing its appeal of a decision from an Irish panel that blocked its ability to alter the terms of its latest hostile takeover attempt.

The bid hinged on Elan shareholders rejecting all four proposals from Elan management at an extraordinary general meeting on Monday, and stockowners approved one of them, a €200 million share buyback, by a thin margin of less than half a percent. That was the mortal wound to Royalty's offer, which has now lapsed and died.

"In light of recent developments, we are no longer pursuing the judicial review we had requested," said Pablo Legorreta, Royalty's CEO and founder, in today's statement.

Royalty left its statement about withdrawing its pursuit for judicial review of an Irish Takeover Panel's decision against its offer a tad opaque, at least with regard to the U.S. firm's next move. After four months of tireless pursuit of Elan and the Ireland-based company's healthy royalty stream on sales of Tysabri, Royalty has a lot invested in this buyout gambit.

Last week Elan made an eleventh-hour appeal to shareholders to approve deals in CEO Kelly Martin's plan to reinvest part of a $3.25 billion windfall from its February sale of rights to Tysabri to Biogen Idec ($BIIB). It also said it would invite Royalty into a sales process that would include all other interested bidders, yet no other offers have yet materialized publicly.

Elan shareholders shot down most of Martin's deals, most notably a $1 billion investment in Theravance's ($THRX) royalties on lung drugs. The majority of shareholders neither embraced Martin's plans nor Royalty's series of takeover bids. Now the fate of their shares could rest in Elan's sales process.

If shareholders have learned anything by now, they should realize that Legorreta is a shrewd dealmaker. As Bloomberg reports, he pioneered the business of acquiring pharma royalty streams with the founding of Royalty in 1996 and operates the company at a 96% profit margin. He didn't get there by paying more than required to snap up assets.

- see Royalty's statement
- check out the Reuters article
- and the June 17 report from Bloomberg

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