Royalty Pharma Meeting With Elan Investors on Bid

Royalty Pharma said it’s meeting with as many as 15 Elan Corp. (ELN) shareholders from today to persuade them to accept its offer to buy the Irish drugmaker.

The company “remains committed to acquiring Elan on the terms set out” in its Feb. 25 offer, New York-based Royalty said today in a statement. “Royalty Pharma is ready and able to move quickly to implement an offer and believes that it will be able to complete due diligence in 20 days.”

Elan hasn’t held talks with Royalty Pharma since it offered to buy Elan for about $6.5 billion, or $11 per American depositary receipt, Elan Chief Executive Officer Kelly Martin said in a telephone interview March 4. Royalty will meet with investors in the U.S. this week and in Europe next week, said Chief Executive Officer Pablo Legorreta.

“We have had some conversations with shareholders to arrange meetings and a roadshow, and it has been fairly positive so far,” Legorreta said in a telephone interview today. “It’s very important to have access to due diligence to move this along.”

Royalty said today that it was “disappointed” that the board of Elan has not engaged in discussions and posted a presentation for Elan investors on its website.

Royalty Committed

“This shows Royalty Pharma is committed to trying to push the offer through,” said Richard Parkes, an analyst at Deutsche Bank in London. “If they get significant support from major shareholders, it may put pressure on management to consider the offer more closely.”

Elan said Feb. 6 it had agreed to sell its 50 percent interest in the Tysabri multiple-sclerosis drug to Biogen Idec Inc. (BIIB) for $3.25 billion in cash plus royalties from sales of the medicine. The Dublin-based company said it would use the proceeds to invest in pharmaceutical assets, and also would return some of the cash to shareholders.

After some investors and analysts expressed skepticism about the acquisition plan, Elan provided more details. The company said Feb. 22 it would buy back $1 billion of shares after the Tysabri sale closes, and on March 4 announced a dividend tied to the royalties. The drug had $1.6 billion in revenue last year.

“Any credible proposal which may be made by Royalty Pharma or any other party will of course be considered by the company alongside the strategic transactions and unique investment thesis referred to in our recent announcements,” Elan said in a statement today.

Shares Rise

Elan rose 0.4 percent to 9.03 euros at 3:00 p.m. in Dublin. The ADRs fell 0.1 percent in New York to $11.86, staying above the $11 offer indicating shareholders expect Royalty Pharma to raise its bid. The company’s shareholders include New Brunswick, New Jersey-based Johnson & Johnson (JNJ), which owns 18 percent.

Elan is interested in buying companies, both listed and closely held, with drug treatments for neurological disorders as well as those for metabolic diseases such as diabetes, Martin said this week. Announcements for any such deals may come “fairly soon” after the Tysabri agreement with Weston, Massachusetts-based Biogen closes at the end of the second quarter, he said.

Royalty Pharma has said the sale of Elan would allow shareholders to avoid the risks of Martin’s plan to make purchases with the proceeds from Tysabri. Royalty Pharma is the world’s largest investor in pharmaceutical royalties with a portfolio of 37 approved and marketed products, according to the company.

To contact the reporters on this story: Makiko Kitamura in London at mkitamura1@bloomberg.net; Allison Connolly in Frankfurt at aconnolly4@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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