As Elan Corporation, plc (NYSE:ELN) and private investment firm Royalty Pharma were sparring over who got to buy Elan, Seth Klarman’s Baupost Group decided to take some profits on its investment in the biotechnology company. According to regulatory filings made with the Irish authority, Baupost has slashed its stake in Elan Corporation, plc (NYSE:ELN) from 9.1 million shares to 7.1 million shares. The ownership only represents a 1.39 percent position in Elan Corporation, plc (NYSE:ELN) and the regulatory filing was enforced because Elan is currently a takeover target.
Seth Klarman and Elan
Klarman bought a stake in Elan Corporation, plc (NYSE:ELN), a neuroscience based biotech company, in the first quarter of 2013. At an estimated average buying price of $10.85, Klarman’s holding had gained 24 percent to yesterday’s close at $13.49. Elan’s shareholders have been fighting the $6.7 billion takeover offer made by Royalty Pharma, and yesterday the shareholders voted for a $200 million shares buyback program which essentially rejected Royalty Pharma’s bid. As a result of this vote, Royalty Pharma has withdrawn its request that required review of a decision that made Royalty Pharma’s takeover bid invalid, if shareholders voted in favor of a share repurchase plan.
Klarman also has a large position in another company closely linked to Elan, Theravance Inc (NASDAQ:THRX). As of March 31, Baupost owns 13.5 million shares of Theravance Inc (NASDAQ:THRX) or roughly 14 percent of the company. In yesterday’s meeting, shareholders also rejected a Elan/Theravance royalty participation proposal. THRX closed down 1.75 percent yesterday. However Elan has four other royalty participation agreements with Theravance that remain in place, which allow Elan access to 21 percent of the royalties it gets from GlaxoSmithKline (NYSE:GSK) (LON:GSK).