Elan Corporation, plc (ADR) (ELN) Received Buyout Bid Before Buyback

There were high hopes for the trio’s collaboration, but those hopes were doused last year when the most advanced experimental stage treatment failed in trials. The setback was viewed by some as a chance for Biogen to takeover Elan, since it left the Irish pharmaceutical with just a single major money-making product–Tysabri. At the time, several analysts agreed Biogen would love to own 100% of Tysabri.  Now it’s clear Biogen’s love affair is with Tysabri alone, not Elan plus Tysabri.

Elan continues to work on a drug to treat agitation and aggression in Alzheimer’s patients, and for bipolar disorders. ELND005 is currently in clinical trials. The company is also working on treatments for Parkinson’s, Crohn’s and several other autoimmune diseases.

But the real benefit from Elan is quite simply its Irish homestead. An acquirer would gain advantage merely from Ireland’s low corporate tax rate: 12.5%.

With M&A activity off to its strongest start in six years, someone with strategic plans and an affinity for Ireland’s business friendly environment could come to court Elan.

And someone has.

Word just broke that Royal Pharma contacted Elan on Feb. 18 about buying the company outright in a $6.6 billion deal, or $11 a share. But, RP Management hasn’t heard back from Elan and was reportedly taken aback after the share buyback was announced. RP questions Elan’s plans to remain a stand alone company.

Elan shares traded up after the news to $11.40, a sure sign markets expect a higher bid or additional offers. Shareholders have little faith that Elan’s CEO Kelly Martin will do the right thing.  Activist investors are likley to push for a sale of the company.

The saga is still unfolding.

The article Elan Received Buyout Bid Before Buyback originally appeared on Fool.com and is written by Diane Alter.

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