Elan tells shareholders it is worth up to $20.80 a share and they should not accept Royalty's $12.50 offer

In the ongoing saga of Royalty Pharma’s takeover attempts, Ireland-based Elan (NYSE: ELN) has communicated with shareholders, providing an assessment of the true value of the company - its Tysabri (natalizumab) asset and cash - put together by Elan’s board of directors and financial advisors, Citi, Davy Corporate Finance, Morgan Stanley and Ondra Partners, saying that tendering Elan shares at $12.50 (the latest price offered by Royalty) will deprive shareholders of billions of dollars of present value.

In February, Elan sold its 50% interest in blockbuster multiple sclerosis drug Tysabri to partner Biogen Idec, in a deal worth $3.25 billion (The Pharma Letter February 7), and earlier this month, Elan paid $1 billion to Theravance for a share of future royalty payments related to four respiratory programs partnered with UK pharma giant GlaxoSmithKline and subsequently announced two acquisitions (TPLs May 13 and 20).

Robert Ingram, chairman of Elan, stated: “All of our actions have been, and will continue, to align our strategy in what we believe is in the best interest of our shareholders. We have had extensive analysis completed by our advisors and we believe the underlying value of Tysabri alone is between $11.85- $17.15. Adding our cash of $3.65 per share, these assets in aggregate are worth at least $ 15.50 and as much as $20.80. Royalty Pharma’s current bid of $12.50 substantially undervalues these assets and tendering shares at this level would be to the direct detriment to our shareholders. Any credible proposal which may be made by Royalty Pharma or any other party will, as previously stated, be considered by the company.”