Elan Corporation plc
) recently received more visibility regarding its proposed
takeover by Royalty Management LLC (Royalty Pharma). The Irish
Takeover Panel recently extended the deadline on Royalty
Management LLC to May 10, 2013.
As per the imposition by the Irish Takeover Panel, Royalty
Pharma must either make an offer to Elan under rule 2.5 of the
Irish Takeover Rules or must notify that it will not proceed with
the same by May 10, 2013.
Notably, in Feb 2013, Royalty Pharma showed interest in
acquiring Elan at $11 for every share of Elan and its American
Depositary Shares (ADS). We note that 1 ADS is equal to 1 share
of Elan. Royalty Pharma's offer represented a premium of 6.3% to
Elan's closing price on Feb 15, 2013.
In its latest press release Elan stated that it will take into
consideration any credible proposal from Royalty Pharma or any
other company alongside the strategic transactions. We expect
investor focus to remain on Royalty Pharma's offer going
Meanwhile, Elan recently closed its Tysabri (natalizumab)
collaboration transaction with
). As a result, Biogen gained full strategic, commercial and
operational control over the multiple sclerosis drug.
We believe that the loss of Tysabri is a huge setback for Elan
since the product was its primary source of revenue. Elan, a
biotechnology company, currently carries a Zacks Rank #5 (Strong
Sell). The bearish rank is largely due to the setback.
Currently, well-placed biotech stocks include
). Both stocks carry a Zacks Rank #1 (Strong Buy). Biogen also
carries a Zacks Rank #1 (Strong Buy).
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