Royalty Pharma Drops Judicial Review Request of Elan BidMakiko Kitamura
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., which has begun a formal sale auction process.
Elan shareholders approved a share-repurchase plan yesterday, a vote that meant Royalty Pharma had to let its unsolicited takeover offer for the drugmaker 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 publicly began in February. Elan said last week it will invite the company to participate in the formal sale process with other potential buyers. Possible bidders include Allergan Inc., Regeneron Pharmaceuticals Inc., Vertex Pharmaceuticals Inc., Alexion Pharmaceuticals Inc., Zoetis Inc., Mylan Inc. and Perrigo Co., Jefferies LLC analyst Corey Davis said in a note to investors today.
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’s American depositary receipts rose as much as 2.2 percent to $13.79 and were trading up 1.9 percent at 11:37 a.m. in New York. The shares have gained 35 percent this year.
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. A “high taxpaying suitor” could be willing to pay $19 a share, Davis said.
Acquiring Elan would give Royalty Pharma access to royalties for Tysabri, an intravenous infusion discovered by Elan for multiple sclerosis. Biogen Idec Inc. 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 Inc.