Elan Corporation, plc
), a neuroscience-based biotechnology company, recently completed
the separation of a significant part of its drug discovery
business (the Prothena business). Following the completion of the
demerger, the erstwhile Prothena unit of Elan has started
operating as an independent, publicly traded entity. The new
entity, known as
Prothena Corporation plc
), is headquartered in Ireland.
Following the completion of the demerger, the stockholders at
Elan on December 14, 2012 (the record date) have received an
ordinary share of Prothena for every 41 ordinary shares or
American Depositary Shares (ADSs) of Elan owned by them. We note
that 1 ADS = 1 share.
Moreover, a wholly owned subsidiary of Elan had subscribed to
Prothena shares worth $26 million. They received 18% of Prothena
shares (calculated immediately after the subscription was made).
Furthermore, the shareholders at Elan directly own 82% of
We remind investors that in September 2011, Elan had sold its
drug delivery unit - Elan Drug Technologies - to
) for approximately $1 billion. The merged entity, headquartered
in Dublin, Ireland, is known as Alkermes plc.
Per the agreement, Elan received $500 million in cash apart
from 31.9 million of Alkermes' ordinary shares. Elan received a
25% stake in the combined company.
In March 2012, Elan sold 24.15 million shares, or 76% of its
stake in Alkermes. Excluding underwriting fees, Elan recorded net
proceeds of approximately $381 million from this transaction.
Elan retained the remaining 7.75 million Alkermes shares due to
certain legal and contractual transfer restrictions.
We currently have a Neutral recommendation on Elan. The stock
carries a Zacks #3 Rank (Hold) in the short run. Pharma stocks
that currently look better-positioned include
). Valeant Pharma carries a Zacks #1 Rank (Strong Buy).
ALKERMES INC (ALKS): Free Stock Analysis
ELAN CP PLC ADR (ELN): Free Stock Analysis
(PRTA): ETF Research Reports
VALEANT PHARMA (VRX): Free Stock Analysis
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