Elan offer shareholders 20% of multiple sclerosis drug royalties

Shareholders at Elan have been offered 20 per cent of the royalties the group receive on sales of its multiple sclerosis blockbuster drug Tysabri.

The move comes as management looks to fight off approaches for the company, although chief executive Kelly Martin said the two issues were not connected.

Elan is proposing to sell its 50 per cent stake in Tysabri to its partner Biogen in a deal worth $3.25 billion.

It has already offered to return $1 billion of this to shareholders by way of a share buyback and has said it was looking to use the balance to pay down debt and invest in a range of companies.

The company said yesterday that shareholders could expect the unusual dividend to be paid twice yearly following completion of the deal.

The first dividend would be payable in the fourth quarter.

Initially, the company said any investment decisions would not be rushed.

However, Mr Martin yesterday accelerated the timetable for potential acquisitions following the Tysabri transaction, saying further details should be provided “in the coming days and weeks”.

‘Worthy of discussion’

Mr Martin claimed yesterday that the “vast majority of investors” did not consider the $6.6 billion approach by US investment firm Royalty Pharma as “worthy of discussion”.

“We simply don’t view the Royalty indication of interest as credible. The vast majority of our investor base simply don’t view Royalty’s indication as worthy of any discussion period,” Mr Martin said.

“I wish Royalty well. They can do what they need to do but we’re not in any discussions with them at all on any topic and we don’t see any need to have those discussions.”

Last night, Royalty Pharma chief executive Pablo Legorreta responded.

“Royalty Pharma is the world’s largest investor in pharmaceutical royalties, with a portfolio of royalties in 37 approved and marketed products,” he said.

“We have approached Elan’s chairman with a possible offer at a cash premium, and we are very serious about our offer. I’m therefore struggling to understand why this offer is, in the words of Kelly Martin, ‘not credible’.

“We look forward to meeting a number of Elan’s large shareholders who have agreed to meet with us later this week.”

– Additional reporting: Copyright The Financial Times Limited 2013, Reuters