Elan Corp.’s board unanimously rejected Royalty Pharma’s takeover bid, advising shareholders not to take action.
Royalty Pharma’s offer price was set at $11.25 per American depository receipt last week after Dublin-based Elan set a stock buyback at that price. The ADRs rose 0.8 percent to $12.05 as of 12:17 p.m. in New York, indicating investors expect a higher bid.
“The offer from Royalty Pharma grossly undervalues Elan’s current business platform and our future prospects,” Chairman Robert Ingram said in a statement today.
Elan, led by Chief Executive Officer Kelly Martin, is returning to shareholders a portion of the $3.25 billion received after selling its stake in the multiple sclerosis drug Tysabri to U.S. partner Biogen Idec Inc. New York-based Royalty Pharma’s takeover offer challenges Martin’s plan to embark on company acquisitions to expand its product portfolio.
Elan rose 4.1 percent to close at 9.27 euros in Dublin. The stock has gained 18 percent this year.
The Irish drugmaker repurchased 14.8 percent of outstanding shares last week, and 92.3 percent of the shares were sold by a single corporate stakeholder, Johnson & Johnson, which owned 18 percent of the company.
J&J’s relationship with Elan had already been winding down after an Alzheimer’s drug they were jointly developing with Pfizer Inc., bapineuzumab, failed in a late-stage clinical trial last year.
Founded in 1996, Royalty Pharma owns royalty interests in 37 approved and marketed pharmaceutical products. In 2004, the firm bought Memorial Sloan-Kettering Cancer Center’s U.S. royalty interest in Amgen Inc.’s Neupogen drug. Pablo Legorreta, Royalty’s founder, previously worked as a banker at Lazard.