Royalty Pharma Drops Judicial Review Request of Elan Bid

Royalty Pharma withdrew its request for a judicial review of an Irish Takeover Panel decision requiring the company to end its $6.7 billion bid for Elan Corp. (ELN), which has begun a formal sale auction process.

Elan shareholders approved a share-repurchase plan yesterday, a vote that meant Royalty Pharma had to allow its unsolicited takeover offer for the drugmaker to lapse, according to the panel’s ruling. A court hearing was scheduled for tomorrow in Dublin to consider the regulator’s decision.

“In light of recent developments, we are no longer pursuing the judicial review we had requested,” Royalty Pharma Chief Executive Officer Pablo Legorreta said today in a statement.

The withdrawal may not end the pursuit of Dublin-based Elan that Royal Pharma began in February. Elan said last week it will invite the suitor to participate in a formal sale process with other potential buyers. Royalty Pharma, which also has headquarters in Dublin, had no comment yet on whether it will participate in the auction, said Andrea Coleman, a spokeswoman.

Elan rose as much as 1.9 percent to 10.28 euros and was trading up 0.7 percent at 1:36 p.m. in Dublin. The stock has gained 30 percent this year.

Bid Increased

Since an indicative offer of $11 for each American depositary receipt on Feb. 25, Royalty has raised its formal bid twice to $13 per ADR, plus $2.50 if certain sales and development goals are met. Elan’s board has rejected all proposals by Royalty Pharma. The ADRs fell 1.2 percent to $13.49 at the close in New York yesterday.

Acquiring Elan would give Royalty Pharma access to royalties for Tysabri, an intravenous infusion developed by Elan for multiple sclerosis. Biogen Idec Inc. (BIIB) of Weston, Massachusetts, agreed to buy Elan’s stake in the drug for $3.25 billion in cash plus future royalties on Feb. 6.

Legorreta pioneered the drug-royalty business in 1996 with the founding of Royalty Pharma, which now has $1.4 billion in revenue and a 96 percent profit margin, according to company documents. Its assets include 38 approved and marketed pharmaceutical products, mostly market-leading drugs for critical care and life-threatening diseases.

JPMorgan Chase & Co., Bank of America Corp. and Groton Partners are advising Royalty Pharma. Elan’s financial advisers include Davy Corporate Finance, Morgan Stanley, Ondra Partners and Citigroup.

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

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

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