* Royalty has not received response from Elan
* Biggest shareholder is Johnson & Johnson
By Jessica Toonkel
NEW YORK, Feb 26 New York-based investment firm
Royalty Pharma does not want to take "no" for an answer to its
$6.6 billion offer for Irish drugmaker Elan Corp.
The company plans to spend the next few weeks calling Elan
shareholders about its offer made on Feb. 18, according to a
source familiar with the situation.
Royalty Pharma, which buys royalty streams of patented drugs
and whose portfolio includes rheumatoid arthritis treatments
Humira and Remicade, is turning to Elan's investors because it
has received no formal response from the company about its
offer, said the source, who wished to remain anonymous because
of not being allowed to speak to the media.
Elan's biggest shareholder is Johnson & Johnson with
an 18 percent stake.
An Elan spokesman declined to comment, as did Johnson &
Johnson. A Royalty Pharma spokesman did not return a request for
Royalty Pharma's offer, worth $11 per Elan share, came just
days after Elan announced it had sold its 50 percent interest in
multiple sclerosis drug Tysabri for $3.25 billion plus future
royalty payments to U.S. partner Biogen Idec.
As a result of the Tysabri sale, Elan announced on Friday
that it would return $1 billion to shareholders and make
acquisitions with the rest of the $3.25 billion raised from the
deal. Elan did not disclose the Royalty Pharma
offer, which was not a formal bid.
Elan, in a statement on Monday, said Royalty Pharma's bid
was an "indicative, conditional, proposal which may or may not
lead to an offer being made for the entire issued share capital
of the Company".
Elan also called the Royalty Pharma bid "highly
opportunistic", given that shareholders had not had the
opportunity to assess the full benefits of the Tysabri sale.
However, Royalty Pharma does not think Elan's management had
the experience to make acquisitions, the firm said in its
statement announcing its proposed offer on Monday.
Still, Royalty Pharma may have a tough time buying Elan
given its $11-a-share offer, wrote Corey Davis, an equity
analyst for Jefferies, in a note on Tuesday.
Royalty Pharma will have to get closer to $20 a share if it
wants to buy the company, wrote Davis, who has a "buy" on Elan.
Elan's stock on Tuesday closed slightly above the offer
price at $11.03, a 7 percent increase from Friday's close on the
New York Stock Exchange.