Elan Drops as Royal Pharma Says Takeover May Fail

Elan Corp. (ELN) fell the most in four months after Royalty Pharma, an investor in royalty streams from medicines, said it may be forced to end its $6.7 billion bid to takeover the Irish biotechnology company.

Elan fell as much as 9 percent to 8.92 euros in Dublin, the biggest drop in intraday trading since Feb. 6, and traded at 9.28 euros as of 2:42 p.m. Trading volume in the stock was 31 percent of the daily average for the past three months at about 122,030 shares.

Elan shareholders may approve a share-repurchasing program at their meeting on June 17, Royalty Pharma said today in a statement after reviewing votes cast as of yesterday. Investor backing of the plan, or of any of three other proposals by Elan’s board, would require Royalty to withdraw its offer under an Irish Takeover Panel ruling.

“Royalty Pharma believes that this proposal can still be voted down if a few shareholders change their vote,” Royalty Pharma said. “Royalty Pharma remains in active dialogue with Elan shareholders.”

As of 5:30 p.m. in New York yesterday, holders of about 276 million Elan American depository receipts, representing more than 70 percent of ADRs held by shareholders in their brokers’ names, had voted on proposals that may block Royalty Pharma’s takeover offer, Royalty Pharma said. Based on its review, Royalty Pharma said the buyback will probably be approved.

Four Transactions

Shareholders are voting on four transactions proposed by Elan: a $1 billion investment in Theravance Inc. (THRX)’s royalties, a $340 million takeover of Vienna-based AOP Orphan Pharmaceuticals AG, the spin-out of an experimental drug called ELND005 for Alzheimer’s disease to Speranza Therapeutics and $200 million in share buybacks. Royalty’s takeover lapses if shareholders approve any one of those transactions.

While the voting deadline for some shareholders has passed, they can change their vote by asking their custodian or proxy voting agent to do so manually by 3 p.m. Eastern time today.

“Royalty Pharma is seeking judicial review of this decision of the Irish Takeover Panel, but there can be no assurance that such judicial review will result in any change to that decision,” the company, which this month boosted its unsolicited offer to as much as $15.50 a share this month, said.

Elan’s U.S. shares fell as much as 5.3 percent, and were down 2.7 percent to $12.75 at 10:20 a.m. in New York.

To contact the reporter on this story: Makiko Kitamura in London at mkitamura1@bloomberg.net

To contact the editor responsible for this story: Kristen Hallam at khallam@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.