The board of directors of the Irish drug manufacturer, Elan Corporation, plc (ADR) (NYSE:ELN) finally approved the formal process to sell the company after receiving expressions of interests from different entities. The company also said that Royalty Management Llc (Royal Pharma) is invited to participate in the process.

Elan Corporation

In a statement,Elan Corporation, plc (ADR) (NYSE:ELN) encouraged shareholders of the company to vote against the current hostile offer of Royal Pharma.

In reaction to the announce of the Irish drug manufacturer, Pablo Legoretta, CEO of Royalty Pharma said, “If shareholders want to have the option to choose between Royalty Pharma’s offer or a sale process, they should vote against all four of Elan’s proposals, especially the share repurchase program.”

Royal Pharma Offered to Acquire Elan Corporation

Royal Pharma offered to acquire Elan Corporation, plc (ADR) (NYSE:ELN) for $6.5 billion or $11 per share, a 12 percent premium of the stock’s closing price of $10.35 per share February 25 at the New York Stock Exchange. The primary objective of Royal Pharma’s proposal is to prevent the company and its shareholders from taking a substantial risk in reinvesting its $3.25 billion proceeds from the sale of Tysabri.

In response, the board of directors of Elan Corporation, plc (ADR) (NYSE:ELN) stated that the offer of Royal Pharma was heavily conditional. Royal Pharma revised its proposal in April and raised the acquisition price to $12 per share. The Irish drug manufacturer rejected the revised offer after the company received an approval from its shareholders to repurchase $1 billion worth of stock between $11.25 and $13 per share. Elan’s takeover panel in Ireland told Royal Pharma to submit is best and final offer by May 10.

In May, Royal Pharma increased its offer to $12.50 per share, a 45 percent premium to the enterprise value of Elan Corporation, plc (ADR) (NYSE:ELN). Again, the board of directors of the Irish drug manufacturer unanimously rejected the amended proposal, citing that it continues to undervalue the current business platform and future prospects.  Royalty Pharma again increased its offer to acquire the Irish drug manufacturer for $13 per share plus $2.50 per share in contingent voting rights. Elan Corporation did not accept it and emphasized that it is still inadequate for its shareholders.

Meanwhile, analysts at RBC Capital Markets noted that Elan Corporation, plc (ADR) (NYSE:ELN) still owns a 30 percent stake in Tysabri. Based on the amount paid by Biogen Idec Inc. (NASDAQ:BIIB) in February for 50 percent of Tysabri at $3.25 billion in return for 20 percent royalties back to Elan Corporation, its current worth is around $13 to $14 per share ($10 per share for Tysabri, $4 cash).