Royalty Pharma Meeting With Elan Investors on $6.5 Billion Bid

March 6 (Bloomberg) -- Royalty Pharma said it’s meeting with “a number of” Elan Corp. shareholders to persuade them to accept Royalty’s offer to buy the Irish drugmaker.

The company “remains committed to acquiring Elan on the terms set out” in its Feb. 25 offer, New York-based Royalty said today in a statement. “Royalty Pharma is ready and able to move quickly to implement an offer and believes that it will be able to complete due diligence in 20 days.”

Elan hasn’t held talks with Royalty Pharma since it offered to buy Elan for about $6.5 billion, or $11 per American depositary receipt, Elan Chief Executive Officer Kelly Martin said in a telephone interview March 4. Royalty said today that it was “disappointed that the board of Elan has not engaged in discussions” and posted a presentation for Elan investors on its website.

“The board’s refusal to engage with Royalty Pharma is depriving Elan shareholders of the opportunity to decide on the merits of the proposal,” Royalty said.

Elan said Feb. 6 it had agreed to sell its 50 percent interest in the Tysabri multiple-sclerosis drug to Biogen Idec Inc. for $3.25 billion in cash plus royalties from sales of the medicine. The Dublin-based company said it would use the proceeds to invest in pharmaceutical assets, and also would return some of the cash to shareholders.

After some investors and analysts expressed skepticism about the acquisition plan, Elan provided more details. The company said Feb. 22 it would buy back $1 billion of shares after the Tysabri sale closes, and on March 4 announced a dividend tied to the royalties. The drug had $1.6 billion in revenue last year.

Shares Fall

Elan fell 0.2 percent to 8.97 euros at 12:32 p.m. in Dublin. The ADRs closed yesterday at $11.87 in New York, indicating shareholders expected Royalty Pharma to raise its bid. The company’s shareholders include New Brunswick, New Jersey-based Johnson & Johnson, which owns 18 percent.

Elan is interested in buying companies, both listed and closely held, with drug treatments for neurological disorders as well as those for metabolic diseases such as diabetes, Martin said this week. Announcements for any such deals may come “fairly soon” after the Tysabri agreement with Weston, Massachusetts-based Biogen closes at the end of the second quarter, he said.

Royalty Pharma has said the sale of Elan would allow shareholders to avoid the risks of Martin’s plan to make purchases with the proceeds from Tysabri. Royalty Pharma is the world’s largest investor in pharmaceutical royalties with a portfolio of 37 approved and marketed products, according to the company.

--Editors: Kristen Hallam, Robert Valpuesta