Elan Corporation plc
) recently provided an update on its proposed $1billion share
repurchase program which is expected to be implemented after the
close of the Tysabri (multiple sclerosis) restructuring
In Feb 2013,
) will gain full strategic, commercial and operational control
over Tysabri for an upfront payment of $3.25 billion to Elan.
Following the news, Elan announced that it will invest a part of
its net proceeds of $3.25 billion from the transaction in
different business assets.
The company further stated that it intends to refinance its
outstanding debt by a share repurchase program by utilizing $1
billion of the upfront proceeds post the restructuring
transaction of Tysabri.
As per the transaction, which is expected to go through
shortly, Biogen will make a royalty payment of 12% on worldwide
net sales of Tysabri (for all indications). After the first year,
Elan will receive a royalty of 18% on up to $2 billion of global
net sales of Tysabri and 25% thereafter on over $2 billion of
global net sales of Tysabri. Tysabri sales were $1.6 billion in
A few days back, Elan's Board of Directors had approved the
initiation of a cash dividend policy, which will enable the
company's shareholders to enjoy long-term cash flow generated by
In Feb, 2013, Royalty Pharma, a private entity, showed
interest in acquiring Elan at $11 for every share of Elan and its
American Depository Shares (ADS). Given that Elan's Board has
approved the proposed dividend policy and provided an update on
its proposed share repurchase program, we believe that the
company is not taking Royalty Pharma's offer into
However, Royalty Pharma is not losing hope. The company is
currently discussing the matter with Elan shareholders and is
ready to make a new offer. Royalty Pharma believes that it will
be able to complete due diligence in few days.
Elan, a biotechnology company, currently carries a Zacks Rank
#5 (Strong Sell). Currently, well-placed biotech stocks include
). While Agenus carries a Zacks Rank #2 (Buy), Cytokinetics
carries a Zacks Rank #1 (Strong Buy).
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ELAN CP PLC ADR (ELN): Free Stock Analysis
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