Royalty wins injunction as bid for Elan hits trouble

DUBLIN Thu Jun 13, 2013 5:21pm EDT

DUBLIN (Reuters) - Royalty Pharma ROYPH.UL won an Irish court injunction against a regulator on Thursday, allowing the U.S. company to appeal a ruling on conditions that threaten to scupper its hostile bid for Elan Corp ELN.I.

Royalty, hoping to convince Elan shareholders to accept its bid in the face of opposition from the Irish drug firm's board, received a blow last week when the state body that monitors takeovers ruled that it could not revise the terms of its offer.

Seeking to stop Elan pushing through two sets of defensive acquisitions at a meeting of shareholders on Monday, Royalty last month made its bid subject to them rejecting any resolution presented at the meeting.

Elan said only two of the four resolutions it planned to put forth would relate to the acquisitions Royalty opposes, so the U.S. company sought to limit its conditions to just those two resolutions. However, this was change forbidden by the Irish Takeover Panel.

Justice Peter Kelly agreed to grant the injunction on Thursday and said the court would meet again next Wednesday to decide if Royalty will be allowed to mount a challenge to the takeover board's decision.

The injunction was the third granted in the past 10 days in a takeover saga that has become increasingly bitter. Elan last week won and subsequently dropped injunctions in courts in Ireland and the United States.

The temporary court relief stops the takeover panel from immediately affirming its ruling that Royalty would have to drop its bid if any of the resolutions are passed on Monday.

If the court rejects Royalty's appeal, it will be forced to honor the original conditions and drop the bid if shareholders back either of the other two uncontentious resolutions - a share buyback and a drug spin-off aimed at cutting operating costs.

Citing a review it had undertaken of voters, Royalty claimed on Thursday that after 70 percent of Elan's U.S. shareholders had lodged their response to the resolutions ahead of Monday's meeting, it believed the vote on the buyback would be approved.

The majority of Elan's shares are held in the United States.

Royalty's current bid offers $13 in cash per share, compared with a previous $12.50. The latest bid added a clause known as a contingent value right (CVR) that could add a further $2.50 per share if blockbuster drug Tysabri hits certain sales milestones.

A source with direct knowledge of the situation told Reuters on Monday that Elan's management, which has said it believes the company is worth $15.50 to $20.80 a share, would "seriously consider" a cash offer at the bottom of that range.

(Reporting by Padraic Halpin. Editing by Jane Merriman and Richard Chang)

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