* New York court schedules next hearing for June 11
* Elan says Royalty's disclosures 'materially inadequate'
* Court relief ends in Dublin ahead of takeover board talks
By Padraic Halpin
DUBLIN, June 4 U.S.-based investment firm
Royalty Pharma is unable to go ahead with its hostile
$6.4 billion bid for Irish drug firm Elan for now,
following a New York court ruling.
Royalty increased its cash offer two weeks ago but Elan,
which has rejected Royalty's advances, was granted a temporary
restraining order late on Monday blocking Royalty from
"consummating or closing" its tender offer.
Elan also won temporary relief from Ireland's High Court on
Monday but that lapsed 24 hours later when Royalty agreed not to
send further documentation to Elan shareholders until Ireland's
takeover body rules on complaints made against its bid.
In its case presented to the Manhattan District Court, Elan
said Royalty's disclosures in its increased bid were "materially
inadequate" and denied Elan shareholders the opportunity to
properly evaluate the offer.
U.S. District Judge William Pauley scheduled a hearing for
June 11 when he will decide whether or not to grant a
preliminary injunction against Royalty.
Elan said that by reducing the acceptance bar for the bid to
50 percent plus one share from 90 percent, Royalty raised the
prospect of taking control of Elan but being restricted under
law from delisting it, as its original bid stated.
This could leave nearly half of Elan's shareholders as
minority holders in a company controlled by Royalty Pharma but
with no clear idea of what the U.S firm's plans are, Elan said.
"Because of Royalty Pharma's failure to disclose all
material information as required by law, Elan's shareholders
lack clear and accurate information about Royalty Pharma's
intentions," Elan said in its complaint.
"The effect of this uncertainty is to coerce Elan's
shareholders to accept Royalty Pharma's inadequate offering
price rather than wait to determine the undisclosed consequences
of Royalty Pharma taking control of Elan."
Elan said its complaint in the Irish court referred to a
proxy statement, filed by Royalty with the U.S. Securities and
Exchange Commission last week, which Elan argued had failed to
meet several material disclosure requirements under Irish
The matter was adjourned at the court until early on Tuesday
when lawyers for Royalty said it had agreed to a request from
the Irish Takeover Panel not to send any more copies of the
proxy statement to Elan shareholders until the complaints were
The panel is due to meet later on Tuesday to discuss the
issues raised by Elan, the court heard.
However, in a blow to Elan's hopes of convincing
shareholders to reject Royalty's $12.50 per share offer, proxy
advisory firm Institutional Shareholder Services (ISS)
recommended on Monday that Elan's shareholders reject a series
of planned transactions at a meeting due to be held on June 17.
Royalty has made its offer conditional on Elan's
shareholders rejecting a $1 billion royalties deal with U.S.
company Theravance and a smaller transaction to take
over two privately owned drug companies.
Many institutional investors, such as mutual funds, rely on
ISS to decide on how to vote in these situations. Elan said last
week that there were different opinions among shareholders on
the Theravance deal.