Investment firm Royalty Pharma has made a $6.6 billion bid approach to Elan, seeking to scupper the Irish drugmaker's plan to spend most of the proceeds from a major drug sale on deals and instead give the money to shareholders.
Royalty Pharma, which invests in royalty streams from pharmaceuticals, said on Monday it planned to offer $11 per share, a premium of 12.6 percent based on the $10.35 closing price of Elan's shares on Feb 15 on the New York Stock Exchange, where the company has its primary listing.
Elan announced earlier this month it would raise more than $3.25 billion by selling its interests in its main drug, multiple sclerosis (MS) treatment Tysabri, to U.S. partner Biogen and effectively reinvent itself by splashing most of the cash on acquisitions.
However, Royalty Pharma said the risks and lack of earnings visibility associated with this plan were substantial, prompting it to offer Elan shareholders a "simple and clear choice" with an offer it said represented the full value of Elan today.
In a press release on Monday afternoon, Elan said it acknowledged Royalty Pharma's bid, which it described as "highly opportunistic".
Elan said its shareholders had not had sufficient time to "assess and realize the full benefit of the Tysabri transaction and the partial unlocking of its value. We expect the Tysabri transaction to close in the near future."
Elan shares in Dublin were up over 9 percent at 8.70 euros ($11.45) by 10:30 a.m. London time.
Elan, in which U.S. group Johnson & Johnson is an 18 percent shareholder, could not be reached for immediate comment.
Royalty Pharma last year paid $761 million for a stake in Biogen's Tecfidera MS treatment.
Following the sale of Tysabri, Elan will still receive a royalty on its sales.
Royalty Pharma said it planned to finance the possible offer through a combination of available cash and debt.