UPDATE 2-Irish drug firm Elan puts itself up for sale
* Seeks to fend off hostile bid by Royalty Pharma
* Elan has attracted interest from other companies - source
By Sam Cage and Jessica Toonkel
DUBLIN/NEW YORK, June 14 (Reuters) - Irish drug company Elan put itself up for sale on Friday, seeking to fend off a hostile bid by Royalty Pharma that shareholders will consider next week.
Elan urged its shareholders not to accept Royalty's current offer, worth a potential $8 billion, but said the U.S. company would be able to participate in the formal sale process if it so wishes.
"Elan Corporation ... today announced that it is proceeding with a formal sale process in light of the expressions of interest received to date," the company said in a statement.
Elan has interest from "more than one interested party," according to a source familiar with the situation, who wished to remain anonymous because they are not permitted to speak to the media. These companies have drugs coming to market and are interested in using Elan's royalties to finance research and development and take advantage of Ireland's low 12.5 percent tax rate for future products, according to the source.
By putting itself up for a sale, Elan hopes to force Royalty Pharma to join the sales process or walk away. Royalty's bid lapses on Monday if Elan shareholders approve any one of the four resolutions proposed by Elan, including a proposed $200 million share buy-back.
On Thursday, Royalty said by its count, shareholders were going to approve the buy-back..
Under Irish Takeover Panel rules, Royalty will not be permitted to submit another hostile bid for Elan for 12 months once its current offer lapses. Royalty is appealing the Irish Takeover Panel's decision to force its offer to lapse if all four resolutions fail. That hearing is scheduled for Wednesday .
Royalty's current bid offers $13 in cash per share as well as a contingent value right that could add a further $2.50 per share if blockbuster drug Tysabri hits certain sales milestones.
Royalty Pharma believes that the only reason Elan has announced a sales process is to deflect Royalty's own offer, the company's CEO said in a statement Friday morning.
Royalty Pharma has not heard from Elan or its financial advisers, Royalty CEO Pablo Legorreta said in the e-mailed statement.
"If shareholders want to have the option to choose between Royalty Pharma's offer or a sale process, they should vote against all four of Elan's proposals, especially the share repurchase program," the firm said in its statement.
Elan's shares in New York were trading around $13.50 in late morning trading, up more than 8 percent on the day.