Elan wins court order to temporarily block take-over attempt

Pharmaceutical firm Elan has won an order from a US judge temporarily blocking Royalty Pharma from attempting a $6.4 billion (€) hostile takeover of the drugmaker after Elan sued to halt what it called a “coercive” tender offer.

US District Judge William Pauley in Manhattan yesterday issued a temporary restraining order blocking Royalty and related parties from “consummating or closing defendants’ tender offer” for the outstanding shares of Elan. Mr Pauly set a hearing for June 11th to consider whether to issue a preliminary injunction. He said Elan may demand evidence from Royalty for use at the hearing. Mr Pauly’s order came after Elan yesterday filed a complaint claiming that Royalty Pharma had made “material misrepresentations” in its revised tender offer. Elan said “shareholders who do not tender their shares may find themselves trapped in a company under Royalty Pharma’s control.”

The offer gives stockholders until June 6th to determine whether or not to waive their shares, Elan said. Elan, which receives royalties on Biogen Idec Inc.'s multiple sclerosis treatment Tysabri, said yesterday in a statement that it won an injunction from the Irish High Court restraining Royalty Pharma from distributing a proxy to shareholders. A court hearing is under way on the matter in Dublin.

Royalty Pharma on May 20th issued a revised proposal to buy the stock of the company at $12.50 per American depositary receipt, raising its bid from $5.7 billion to $6.4 billion.

With a portfolio of 37 approved and marketed products, New York-based Royalty Pharma calls itself the world’s largest investor in pharmaceutical royalties. Elan said in the complaint filed in New York that Royalty Pharma’s tender-offer documents fail to disclose required details of its plans for the company, its management and assets, including whether it plans to change dividend policies and whether it plans to take on additional debt or sell Elan assets to repay a $2 billion bridge loan. Royalty Pharma also didn’t give details of its own corporate structure and sources of capital, Elan said.

“Unless promptly enjoined, Royalty Pharma’s material misrepresentations and omissions will deny Elan’s shareholders the opportunity to properly and meaningfully evaluate Royalty Pharma’s lowball revised tender offer and deliver the company into Royalty Pharma’s hands at an unfair and inadequate price,” Elan claimed in its court filing.

Elan argues that without a court order, its shareholders won't be able to properly evaluate the revised tender offer. Elan seeks an order directing the Royalty Pharma to make a "full and complete corrective disclosure" in connection with the revised tender offer by June 14th and requiring it to extend the tender offer until June 30th. An extraordinary general meeting of Elan's shareholders is scheduled for June 17th to consider several transactions proposed after Royal Pharma's takeover bid, including a $1 billion investment in Theravance Inc.'s royalties.

Bloomberg