Royalty Pharma has increased its bid for Elan Corporation, plc (NYSE:ELN) to $12 per share. The company offered $11 per share or $6.5 billion in February, but Elan rejected that bid.
Last week Elan received approval from its shareholders to buy back $1 billion worth of shares between $11.25 and $13 per share. It’s expected to finalize the price on that buyback this week. Reuters reports today that Royalty Pharma said its bid might fall under $12 per share depending on the final buyback deal.
Royalty Pharma released a statement today saying that it believes that shareholders of Elan Corporation, plc (NYSE:ELN) will prefer its offer to “the high risk strategy outlined by Elan’s management.” At the moment of this writing, shares of Elan Corporation, plc (NYSE:ELN) were trading on the New York Stock Exchange at around $12 per share.
If shareholders opt for the buyback offer instead, it would return cash to them after it sells its interest in the drug Tysabri, a multiple sclerosis drug. The interest in that drug is expected to sell for $3.2 billion. The proposed buyback would be almost 15 percent of the drug maker’s current issued share capital.
In addition to the share buyback, Elan Corporation, plc (NYSE:ELN) also said it would reinvest part of its proceeds from the sale of Tysabri through the acquisition of various assets and also to refinance some of its debt.
A takeover panel in Ireland had given Royalty Pharma until May 10 to make a firm offer. The company said it plans to finance the buyout through some new credit facilities and also existing resources.
The company is being advised by Bank of America Merrill Lynch, JPMorgan and Groton Partners.