Perrigo pays $8.6 billion for Elan
pharmafile | July 30, 2013 | News story | Research and Development, Sales and Marketing | Elan, Perrigo, Tysabri
Generics firm Perrigo has snapped up Ireland-based Elan in a multi-billion dollar deal, ending a bitter takeover battle that has gone on for months.
Elan had rejected three lower bids from US investment firm Royalty, which ended in court hearings before the company put itself up for sale in June.
US-based Perrigo, which specialises in generics and OTC brands, has been enticed by the low Irish tax rate it will enjoy and growing royalties from multiple sclerosis treatment Tysabri.
Under the terms of the deal Elan shareholders will receive $6.25 in cash and 0.07636 shares of New Perrigo for each Elan share. The transaction values the entire share capital of Elan at around $8.6 billion based on Perrigo’s closing price on 26 July 2013.
“Elan has uncovered an excellent offer for its shareholders, substantially ahead of the level Royalty Pharma could achieve,” Berenberg Biotech analysts said in a note to investors.
“Through this transaction, Perrigo establishes a diversified platform for further international expansion,” stated Perrigo chairman and chief executive, Joseph Papa.
“We believe this transaction is compelling for Elan shareholders and fully takes into account the value of Elan’s assets, including a large cash balance and a double-digit royalty claim on Tysabri, a blockbuster product that generated revenues of US$1.6 billion last year and has been growing at a compound annual growth rate of 19 per cent.”
Robert Ingram, chairman of Elan, said: “This is an excellent transaction for Elan shareholders and provides them with cash consideration as well as the opportunity to benefit from the potential upside value of the new company.
“Joe Papa and his team have demonstrated exceptional capability and delivery of results in building a premier healthcare company over the past number of years. We have the confidence in Joe and his leadership team to continue to grow and expand its presence on a global scale.”
The proposed transaction, which has been approved by the boards of Perrigo and Elan, is expected to finalise by the end of 2013.
At the close of the transaction, Perrigo and Elan will be combined under ‘New Perrigo’ based in Ireland. Here it will enjoy a 12.5% corporation tax rate, significantly below the US corporate tax rate of 35 per cent.
Perrigo will also share in the royalties of Tysabri. Elan currently earns a 12% royalty on global net sales of the drug but from May next year, this will increase to 18% on annual net sales up to $2 billion, and to 25% on annual net sales above this amount.
Related Content
FDA advisory committee votes in favour of OTC contraceptive pill
Perrigo Company has announced that the US Food and Drug Administration’s (FDA) Nonprescription Drugs Advisory …
Biogen halts Tysabri trial after failure in acute ischemic stroke
Biogen has halted its investigation into the efficacy of its humanised monoclonal antibody Tysabri (natalizumab) …
Biogen says European regulatory committee adopts positive view for Tysabri
Biogen (Nasdaq: BIIB) said the European regulatory committee has backed the approval of a variation to …
