After months of fighting off the advances of unwanted suitor Royalty Pharma, Irish biotech Elan Corporation, plc (ADR) (NYSE:ELN) finally got an offer it couldn’t refuse — from drugmaker Perrigo Company (NYSE:PRGO) .
The OTC drugmaker based in Michigan said today that it would buy Elan Corporation, plc (ADR) (NYSE:ELN) for $6.25 per share in cash plus $10.25 per share in stock for a total of $16.50 per share, or around $8.6 billion. That’s a premium of 10.5% to Elan Corporation, plc (ADR) (NYSE:ELN)’s closing price prior to the acquisition announcement. Royalty Pharma’s final bid was $13 in cash per share plus a “contingent value right” valued at an additional $2.50 per share if Elan Corporation, plc (ADR) (NYSE:ELN)’s multiple sclerosis drug Tysabri achieved certain sales milestones, and the investment firm recently penned an open letter to the biotech essentially saying good luck with finding a better offer than that.
Stating his belief that the union of Perrigo Company (NYSE:PRGO) and Elan Corporation, plc (ADR) (NYSE:ELN) would create an industry-leading health care company with the financial wherewithal to grow and capitalize on international opportunities, Perrigo Company (NYSE:PRGO) Chairman and CEO Joseph C. Papa said, “We believe this transaction is compelling for Elan Corporation, plc (ADR) (NYSE:ELN) 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 $1.6 billion last year and has been growing at a compound annual growth rate of 19%.”
The transaction has been unanimously approved by the boards of directors of both companies and is expected to close by the end of 2013. It is subject to regulatory approval and needs approval from shareholders.
Perrigo Company (NYSE:PRGO) and Elan would combine into a new company incorporated in Ireland, which is expected to be called Perrigo Company plc or something close to that, but will be led by Perrigo Company (NYSE:PRGO)’s current management team. Perrigo, which has been headquartered in the small western Michigan town of Allegan since 1887, said it would move its tax residence to Ireland and hopes to cut its tax liabilities nearly in half as it grows non-U.S. sales.