Royalty made its initial approach in February, attracted by the promise of lucrative revenues from Elan’s multiple sclerosis drug Tysabri. But Elan has fought to maintain its independence through a series of manoeuvres designed to frustrate the bid, which is contingent on 90 per cent acceptances.
Royalty last week lowered its bid for Elan to $11.25 a share from an earlier $12 offer, pricing in the result of a $1bn share buyback by Elan. The $12 per share offer had valued Elan at $7.3bn and had been sweetened from an initial proposal.
Buoyed by the outcome of the buyback, Elan, which claimed last month that most of its shareholders did not view Royalty’s original proposal as worth consideration, strongly advised shareholders to take no action in relation to the bid.
“The offer from Royalty Pharma grossly undervalues Elan’s current business platform and our future prospects. As a result the board unanimously and without reservation rejected the offer,” Elan chairman Robert Ingram said in a statement.
“Put simply, the vast majority of Elan shareholders believe Elan shares are currently worth more than $13,” Berenberg Bank analyst Adrian Howd wrote in a note. “As we stand today, Royalty Pharma would seemingly have to offer in excess of $13 ... We see this as unlikely.”