Alkermes has agreed to team up with Elan Drug Technologies, the Irish drugmaker's drug delivery and manufacturing unit, in a $960 million cash-and-stock deal. The buyout will create a $450 million drug company with 25 products, including Alkermes' addiction drug Vivitrol and EDT's Invega Sustenna, a long-lasting version of Johnson & Johnson's antipsychotic recently approved in Europe, and Ampyra, a drug for multiple sclerosis patients marketed in the U.S. by Acorda Therapeutics.
Alkermes will pay $500 million in cash and $462 million in shares to Elan for the drug technology unit, giving the Irish company a 25 percent stake in the new, Dublin-based Alkermes plc. Alkermes CEO Richard Pops called the deal "financially transformative" and said the combined company would be profitable from the get-go. "This merger will bring the scale and resources for strategic and balanced investment across the whole product continuum, from R&D innovation to clinical development, to world-class manufacturing and commercial expansion," said Pops, who will be chairman and CEO of the new firm.
For Elan, the sale of EDT marks the culmination of a years-old ambition. The company tried to market EDT for sale in 2008, but the tight credit market hampered its efforts. It briefly entertained the idea of a spinoff last year. In announcing the deal, Elan CEO Kelly Martin (photo) said it would "aggressively" advance some long-standing goals, including paying down debt and focusing more tightly on Tysabri, its MS drug.
"It's a good deal," Berenberg analyst Adrian Howd told Bloomberg, saying that EDT "has never been the crown jewel at Elan. This enables them to restructure the business and to focus on the key value drivers."