|Elan sold Tysabri to Biogen Idec for $3.25 billion.--Courtesy of Elan|
Some shareholders started grumbling that they would like to get their hands on the windfall as soon as they learned Elan would sell its key asset, multiple sclerosis drug Tysabri, to Biogen Idec ($BIIB) for $3.25 billion. They just didn't see the point of letting Elan CEO Kelly Martin take all of that cash for a shopping spree to remake Elan ($ELN).
Martin and the board certainly heard enough to realize they needed to share the spoils because they now say shareholders will get $1 billion in the form of a share buy-back. That represents more than 15% of Elan's market share. He will take the rest for his shopping spree.
"Understandably, many market participants are looking forward to further clarity around how we intend to deploy the significant upfront payment we will be receiving," Martin said in the statement. "We have been making significant progress in this regard and are prepared to move expeditiously, upon close, on the redeployment of capital."
|Elan CEO Kelly Martin|
The plan, the company said, is to pay down some debt, do the share repurchase and then go out and get some new products. This has all materialized in the two weeks since Elan surprised the market by agreeing to sell Tysabri to partner Biogen for the $3.25 billion cash and some royalty payments. When Elan's only other prospect, long-shot Alzheimer's drug bapineuzumab, got iced in August, the market expected Elan would eventually land in the arms of Biogen. Biogen already owned nearly 20% of the Irish company.
Clearly the board hopes the plan will appease shareholders, some of who initially suggested Elan should give all of the money to shareholders and fold up shop.
"We greatly value our shareholder relationships and the access to equity capital these relationships give us and we appreciate the time horizon of many of our long term holders. We will continue to work on ways to unlock incremental value to their direct benefit," the company said.
- here's the Elan announcement
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