Perrigo signs $8.6bn Elan takeover deal
This article was originally published in Scrip
Perrigo has agreed a cash and shares takeover of Elan which values the Irish firm at $16.50 per share. The total value of the deal is $8.6bn at Perrigo's share price of $134.23 at close of business on 26 July.
Elan formally put itself up for sale in June after its controversial agreements to buy a selection of assets were blocked by shareholders, and the hostile takeover bid of Royalty Pharma, worth $13-15.50 per share (up to $8bn in all), fell through. The new deal represents a 10.5% premium to the closing price of Elan's American Depositary Shares on 26 July.
The acquisition will bring to Perrigo the double-digit royalty stream on Biogen Idec's multiple sclerosis blockbuster Tysabri (natalizumab), and also an Irish base with the associated tax benefits.
Elan's royalty stream on Tysabri is currently 12%, and will rise to 18% on sales up to $2bn from 1 May 2014, and to 25% on sales above that threshold. Tysabri's 2012 sales were $1.6bn.
Perrigo said the deal would be accretive to Perrigo's adjusted earnings per share from 2014. It said that it expected to achieve recurring after-tax operating expense and annual tax savings worth $150m.
The deal, which is worth $6.7bn net of Elan's cash on hand, will be financed by bridge financing from Barclays and HSBC Bank USA (to the tune of $4.35bn) plus Perrigo's cash on hand. It has been unanimously approved by both boards of directors and is expected to close by the end of 2013.
Allegan, Michigan-based OTC, API and generic products maker Perrigo will pay Elan shareholders $6.25 in cash plus 0.07636 Perrigo shares per Elan share held. Upon completion, Elan's shareholders will own 29% of the combined company. Perrigo shareholders will receive, for each old Perrigo share held, one new Perrigo share and one cent in cash. Shares in the combined company are expected to trade on the New York Stock Exchange and the Tel Aviv Stock Exchange.