US drugmaker Perrigo has agreed to buy Elan for $8.6bn (£5.5bn) ending a long battle in which Elan rejected three hostile bids by US investment firm Royalty Pharma before putting itself up for sale last month.
The deal will give Perrigo significant tax savings from being domiciled in Ireland, which has a 12.5 per cent corporate tax rate, compared to the 35 per cent rate in the US. It will also give it access to royalty rights to Elan’s multiple sclerosis drug Tysabri, whose sales hit $1.6bn last year. Elan sold its 50 per cent stake in the drug to US partner Biogen Idec in February, but retains royalty rights on the drug.
The company will pay around $6.25 per share in cash and $10.25 per share in stock, partly funding the deal with $4.35bn of bridge financing from Barclays and HSBC. This is around a 10.5 per cent premium on Elan’s closing price last Friday and more than the offer of $13 plus a potential $2.50 per share contingent on Tysabri’s performance from Royalty Pharma.