Elan has struck a deal to pay a billion dollars for a share of Theravance's future royalties on Breo and a slate of other respiratory drugs now in development, announcing the deal right on the heels of Breo's approval in the U.S. on Friday.
Elan's board of directors has rejected an $11.25-per-share bid by Royalty Pharma, and some analysts say that at this point there's not much likelihood that Royalty can win out in the end.
Johnson & Johnson has sold 82 million Elan shares for $11.25 per share as part of Elan's $1 billion stock buyback plan, providing J&J's Janssen unit an after-tax gain of $213 million. The "Dutch Auction" price for Elan's buyback has implication for Royalty Pharma's ongoing efforts to acquire the Ireland-based biotech for up to $7.3 billion.
Royalty Pharma has brought a fully financed offer for Elan to the table, poking a hole in the argument from Elan management about the bidder's ability to make a credible offer. On Monday Royalty rolled out an offer of up to $12 per share, upping the ante from the investment group's previous overture.
The board of Elan recently waved off an $11-a-share buyout offer from Royalty Pharma as "highly conditional" and told the group to come back when it had something more concrete to talk about. Now Royalty is back with a rock-solid, all-cash $12-a-share offer and a bit of dismissiveness in its own talk.
Elan shareholders have overwhelmingly approved a $1 billion share buyback from the company, cashing in on some of the spoils of the company's deal that gave Biogen Idec complete control over Tysabri.
Being a shareholder in Elan these days is a bit like taking a multiple choice quiz in an advanced MBA class.
Elan has wrapped up its $3.25 billion deal to sell its stake in Tysabri to Biogen Idec and begun to pivot to the next chapter in its storied journey, ready to unleash a burst of new acquisitions after it hopes to bury a buyout offer from an unwelcome suitor.
Anxious to win support for its $6.6 billion bid to snap up Elan before the biotech company can spending its $3.25 billion Tysabri windfall on new therapies, Royalty Pharma has announced it's ready to complete due diligence in a matter of days and is setting up meetings with Elan shareholders to press its case.
Elan ($ELN) has found a way to sweeten the pot for investors who may be tempted to sell their shares to a royalty group offering to cash them out following the $3.25 billion Tysabri deal.