Royalty Pharma raises bid for drugmaker Elan to $12.50 per share or about $7.5 billion

NEW YORK, N.Y. – Royalty Pharma has raised its offer to buy Elan on the condition that shareholders reject the Irish drugmaker’s push to refocus its business through a string of recently announced deals, including two new deals unveiled Monday.

Royalty said Monday it will pay $12.50 in cash for each share of Elan Corp. PLC. That adds up to a total value of about $7.5 billion.

Royalty had offered in February to buy Elan for $11 per share and later raised that bid to $11.25 per share.

Elan has said the $11.25 bid was much too low. It said Monday its board will assess Royal Pharma’s latest announcement and, in the meantime, Elan shareholders should take no action.

Royalty is a privately held New York company that buys royalty interests in drugs and late-stage drug candidates.

Elan earlier on Monday announced that it planned to pay about $338 million for a privately held, Austrian drug developer and at least $110 million for stakes in two other companies. The company also said last week it will pay $1 billion for the right to future royalties from four respiratory treatments being developed by Theravance Inc. and GlaxoSmithKline.

Last month, Elan closed a deal to sell its interest in the multiple sclerosis treatment Tysabri to Biogen Idec Inc., its former partner on the blockbuster drug, for $3.25 billion in cash and recurring royalty payments.

Royalty Pharma said in a statement that Elan “dramatically overpaid” for the Theravance deal. It also said that deal “was pursued in haste and without critical confidential information which could significantly impair the value of the asset.”

The company added that it suspects the same may be true of the deals Elan announced Monday. It said its increased offer is conditional on shareholders voting against the Theravance deal and the other transactions.

U.S.-traded shares of Elan climbed 3.5 per cent, or 41 cents, to $12.08 Monday afternoon, while broader trading indexes fell slightly. That put the stock up 18 per cent since the start of the year.